Analytics & Optimization Analytics Unleash the Power of Alternative Energy
What are innovators doing to release the untapped potential that alternative energies like wind power have to offer?[Read More]
Analytics & Optimization Analytics Unleash the Power of Alternative Energy
“The wealth of the nation is its air, water, soil, forests, minerals, rivers, lakes, oceans, scenic beauty, wildlife habitats and biodiversity… that’s all there is. That’s the whole economy. That’s where all the economic activity and jobs come from. These biological systems are the sustaining wealth of the world.” – Gaylord Nelson, former US Senator and founder of Earth Day When we ponder climate change and alternative energy, the visceral reaction for many of us is not just thinking about our future on this planet, but also our children’s, and that of their children. Even proponents of “staying the course” by focusing largely (or even solely) on traditional energy sources would have to acknowledge that our global economy would collapse as our systems degrade over time – as Gaylord Nelson reminds us in his brief but compelling message. Alas, the challenges of tapping into alternative energy’s potential are still very... [Read More]
Fraud & Security PSD2 – New Rules for Strong Customer Authentication
Rather like Brexit, the Second Payment Services Directive (PSD2) is coming and whether you like it or not, it will bring important and sustained changes. In the case of PSD2 those changes will disrupt the way that payments work all around Europe. So, what will the changes be? While much is uncertain, we can highlight some impacts which are almost guaranteed. In particular, those at the rock face of PSD2 agree on Strong Customer Authentication (SCA): Do whatever you can to avoid it. There are good reasons for PSD2 uncertainty. Key parts of the directive aren’t fully documented. More importantly, because the programme has been designed to be open to interpretation, to be flexible, even when it is written down, there is a lot of space for interpretation. And there are plenty of people who want to fill the gaps in to suit their own ambitions. Who will emerge as... [Read More]
Fraud & Security Cybersecurity Insurance – 3 Reasons Businesses Aren’t Buying
We recently commissioned a study from independent research company Ovum on how organizations are tackling cybersecurity and what they plan to do next. Losses because of a data breach or other cyberattack can be severe, particularly when factors such as customer and shareholder confidence are taken into account. We therefore expected that cyber risk insurance would be an increasingly important way in which organizations are mitigating their risk. The results were far from uniform: The UK was the most insured country we surveyed, with 69% of respondents holding some kind of insurance, and the USA was the least insured – only 51% of US respondents had any kind of cyber risk insurance. Across the industries surveyed, financial services firms were the most likely to be insured (71%), and healthcare the least likely (26 percent). Even when businesses have invested in cyber risk insurance, it’s unlikely to cover them for all... [Read More]
Risk & Compliance AI Spotlight: FICO’s Machine Learning Facilitates AML
This is a guest post from Nikola Marcich with the Policy team at the Software & Information Industry Association (SIIA), the principal trade association for the software and digital content industry. Walking into Bernie Madoff’s home in 2005, you would not have found piles of money under a mattress, behind a sofa or in his garage. At the time, Madoff had been running an elaborate Ponzi scheme through the wealth management arm of his business that reached $65 million by the time of his arrest in 2008, deliberately hiding the money intricately within the financial system. Serving as Madoff’s primary bank for over two decades, JP Morgan was one of the culprits of Madoff’s fraudulent actions and money-laundering tactics. In their innocent incompetence to identify clear red flags about Madoff’s returns and file a Suspicious Activity Report (SAR), JP Morgan’s was fined $1.7 billion in 2014. JP Morgan’s fine highlights the... [Read More]
Risk & Compliance FICO Is a Category Leader in IFRS 9 Solutions – Chartis
FICO has been named a Category Leader in IFRS 9 solutions by Chartis Research in its report IFRS 9 Technology Solutions: Market Update 2017. “Like other regulatory mandates of the past decade, IFRS 9 is another transformational event for all financial institutions (FIs),” the report states. “In all likelihood, it will reduce FIs’ profits and retained earnings, increase their loan loss provisions, and have a negative impact on their regulatory and economic capital. To mitigate these impacts, FIs will have to rely heavily on the rigor of their data management and the quality of their data, and on the application of Expected Credit Loss (ECL) modeling and overall governance.” The FICO® IFRS 9 Impairment Management Solution includes industry-leading predictive modeling for loss forecasting; software for high-speed model execution, loss reporting, process governance and “what-if” scenario analysis; and strategy consulting from advisors with extensive domain and analytics expertise. “Effectively addressing the challenges of this... [Read More]
Customer Engagement Telecom — Is Your Digital Strategy Ruining Your Customer Experience?
My telecommunications service provider put me through two hours of customer service hell when I was upgrading my set-top box. What should have been a simple plug-and-play switchover turned into an arduous journey through various customer service units. At no stage did I get the impression that there was a central location for my data, as I had to repeat my address and account details several times and rerun security checks across automated and human channels. This kind of friction in the customer experience is all too common, no matter what your spend with the provider. It is little surprise that UK service providers’ churn rates for multi-play packages can be up to 20% per year, with the cost to recruit a customer approximately £300 to £400. Compare that experience to digital-first companies like Amazon and Apple, which have remarkable stickiness and growth, where the experience is frictionless and most... [Read More]
Fraud & Security 6 Principles for Cyber Risk Scores — and Why We Need Them
The use of scores that rate a firm’s cybersecurity risk — such as the FICO® Enterprise Security Score — is picking up momentum. In an effort to ensure that these scores consistently add value, and to ensure that they help rather than harm businesses, a group of firms recently convened to develop industry standards for cybersecurity ratings. FICO joined this group, along with several Fortune 500 companies and a number of the country’s biggest banks, and I am proud of the principles we developed. By creating these principles, we sought to: Promote quality and accuracy in the production of security ratings Promote fairness in reporting Inject best-practice decision management governance standards into a new domain Include a coordinated process for adjudicating errors or inaccuracies in reported content Establish guidelines for appropriate use and disclosure of the scores and ratings Why were principles needed? One reason is that there is a... [Read More]
Risk & Compliance FCA’s New Rules for UK Credit Line Increases
My last two posts in this update on UK cards discussed the growth in unused credit and the rising delinquencies in New cards. Both of these posts discussed credit line increases, but there’s one more factor that could weigh heavily on issuers’ plans. The FCA is preparing to introduce new guidelines for credit cards that will impact line increases. It is anticipated that all new accounts will have to opt in for any offered increases, and this is expected to reduce the number of increases that take place. The approach for existing customers should remain as per today, where customers have to reject the offer. However, customers who display a sustained propensity to pay the minimum payment (on non-promotional balances) will either have to opt in or be excluded from increases. Customers showing signs of persistent debt (based on how much they have paid in fees and interest versus reducing their balance)... [Read More]
Analytics & Optimization “We Can Change Our Strategies in 2 Days” – African Bank
African Bank, a large retail bank in South Africa, recently went through a large-scale restructuring in order to bring more efficiency, transparency and collaboration to the way it made decisions. Working with FICO, the bank applied a standards-based decision management methodology to fully modernize its decision system. Now that the new solution has been implemented, we spoke with Dawid Van Zyl, Program Executive of Credit Decisioning at African Bank, to learn more. Q: What challenges was African Bank facing with its existing credit decision process? Dawid: Our credit decision lifecycle was fragmented over different applications and teams. This was causing inefficiencies and missed opportunities for our executives to react to the market. We knew we needed to do a complete overhaul of the existing process in order to be effective and profitable. Q: How did you and the FICO team create a solution for this challenge? Dawid: The first step... [Read More]
Collections & Recovery GDPR – Two First Steps for Collectors
If my last post on GDPR and collections left you feeling mildly depressed, you’re paying attention! Now that we’ve scoped out the difficulties, here are a couple of things you can do to prepare. And preparation, like compliance, is important: GDPR sets out some steep fines for non-compliance, and you don’t want your department — or your vendor — to be the trigger. 1. Create Your Data Inventory GDPR wants you to only use the data that is absolutely necessary. Whether your decisions are based on rules or algorithms, you’re going to have to show what data you are using and how it impacts decisions in collections. As someone executing collection strategies, you want to make sure neither you, your department nor the third parties serving you cause the business to be exposed. You need to make sure you understand where the data you’re using comes from, and prove that... [Read More]