Fraud & Security Taking Charge of Payment Fraud this Holiday Season

Holiday Security

It’s not surprising that consumers are particularly concerned about payment card fraud during the holiday season. On top of worrying about the bills they’re racking up this month, the last thing consumers need are unpleasant surprises on their credit card and bank statements.

The holiday shopping season accounts for roughly 20 percent of all consumer spending in the US, according to the National Retail Federation. Total consumer spending for Christmas and Hanukah is nearly triple the spending on all other holidays combined (e.g., Mother’s Day, Valentine’s Day, Halloween).

This prompted us to survey consumers in the US, UK and Canada about payment card fraud with the holidays approaching. We found a large majority of consumers are concerned enough about fraudulent use of their credit cards and debit cards that they want to take a more proactive role in their own security.

In the US, 70 percent of respondents said they... [Read More]

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Risk & Compliance Can Focusing on Basel II Increase Your Bank’s Bad Debt? Part 3


I’ve been highlighting questionable modelling practices by some retail banks under the auspices of Basel II compliance, as well as offering alternate best-practice guidance.

Today, in my third entry in the series, I’ll focus on the misuse of the Gini coefficient measure, which generally falls into two categories:

“Chasing the Gini”

Basel II has increased the focus on building more powerful predictive models. However, we often see this lead to an inappropriate focus on the Gini coefficient measure. At its worse, this may entail model developers blindly trying to maximise this measure of predictive power without understanding the consequence.

Working with one client, for example, we were advised that they had increased the Gini by over 20 points on a new model. However, when the model was implemented, there was no improvement seen in business performance. As it turns out, the increase stemmed from impacts very high up the score... [Read More]

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Risk & Compliance Credit Research Part 4: Second Mortgages Decline Post-Recession


I’ve been blogging about the impact of the Great Recession on first mortgages, most recently examining mortgage delinquency rates. In this entry, I turn my attention to second mortgages. Recent FICO research shows that there are now significantly fewer US consumers with such loans. And despite the fact that housing prices have steadily recovered over the past 2+ years, there is no indication that consumers are beginning to leverage any of that additional equity.

As in my prior posts, I’ll focus on mortgage-related trends in six Metropolitan Statistical Areas (MSAs): Miami, Phoenix and Las Vegas as examples of cities that had a more pronounced contraction during the recession, and San Francisco, New York and Washington D.C. as areas that weathered the crisis comparatively well.

In the first phase of our analysis, we classified second mortgages into two broad categories: revolving Home Equity Lines Of Credit (HELOCs) and closed-end home equity... [Read More]

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Customer Engagement Your Content Guide to FICO World 2014

FICO World Guide

FICO World 2014 came to a close in San Diego last week; here is a detailed breakdown of where you can find the best videos, announcements, pictures and session presentations from the event:


Here is a listing of what we announced last week:

FICO World 2014 Draws Sellout Audience in San Diego to Explore the New Customer Imperative Cybersecurity Expert Theresa Payton and FICO CEO Will Lansing Call for Stronger Cybersecurity at FICO World 2014 FICO Unveils New Technologies for Real-Time Streaming Analytics, Text Analytics and Big Data Analysis at FICO World FICO Introduces New FICO Analytic Cloud Partner Network Consumers Who Get Their FICO Scores through Open Access Program Exhibit Increased Brand Loyalty TSYS and FICO to Deliver Analytics-Powered Card Marketing Product

FICO World Videos

Visit the FICO World 2014 tab on the FICO YouTube channel to see all the videos. The highlights include:

FICO World 2014 – Time... [Read More]

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Analytics & Optimization The Fantastic Four: Chief Analytics Officer, FICO World Panel

CAO Panel

“They say there are three ways you can get fired at Caesars, you can steal, you can sexually harass or you can run an analytics test without a control group!” joked Ruben Sigala, chief analytics officer at Caesars Entertainment.

Such is the passion with which his team operates when trying to optimize for profit at one of the world’s leading casino-entertainment companies.

The rise of analytics-driven decision making, the role of the Chief Analytics Officer and the profession took center stage on day four of FICO World.

Dr. Andrew Jennings, FICO’s chief analytics officer, invited three fellow CAO’s to join him to explore these themes; Alfredo Cateriano, Ph.D., vice president and chief analytics officer at Ford Motor Credit Company, Ruben Sigala, chief analytics officer at Caesars Entertainment and Michael Wu, Ph.D., chief scientist at Lithium Technologies.

The panel tackled the ins-and-outs of their various data-centric cultures with humor and insight.

... [Read More]

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Analytics & Optimization FICO WORLD VIDEO: Highlights of Day 3

USS Midway

On Wednesday FICO World attendees danced the night away on the USS Midway Aircraft Carrier Museum, yet they were still able to get up early for keynotes from Maribel Lopez, principal and founder of Lopez Research, enterprise mobility expert, and author of the forthcoming book, Right-Time Experiences: Driving Revenue with Mobile and Big Data, and FICO CTO Stuart Wells’ keynote. Both gave us a look into the future and discussed the evolution of Big Data Analytics software. Stuart even gave us a preview of some technology on FICO’s horizon. Watch the video, to get FICO World attendees take on Day 3.

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Analytics & Optimization FICO World Survey: Analytics – Does One Size Fit All?

One Size

Our third and final FICO World survey looked at the nature of the enterprise analytics function. Based on our results, it looks like each organization treats it a little differently.

Our first question was whether or not attendees’ organizations had chief analytics officers. Apparently most organizations don’t. While just 31% of respondents said yes, 69% said no.

We then asked attendees where their top analytics people were located on their companies’ org charts. Vice president and director tied for the top spot with 29% each. They were followed by the C-suite (17%), manager (16%), and individual contributor (9%). There was no clear-cut winner among those answers, and a somewhat surprisingly wide range of responses.

Lastly, we asked attendees how the analytics function is structured at their companies. Half our respondents said their companies had multiple, separate analytic teams. By contrast, 32% said the function was consolidated in a... [Read More]

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Fraud & Security VIDEO: Highlights of Day 2 at FICO World


FICO World attendees took to the streets this morning to participate in a 5k Fun Run around San Diego. After the fun run (and presumably a shower) attendees were treated to keynotes from FICO CEO Will Lansing, and Theresa Payton, former White House CIO, cybersecurity authority, identity theft expert and author of Privacy in the Era of Big Data. We caught up with several attendees to get their impressions of the Day 2 keynotes.


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Fraud & Security Riding the Rails of the Digital Payment Revolution

FICO World 2014 logo

This week I’ve been at FICO World, our company’s annual customer conference, where I had the honor of exploring the future of payment fraud with CEB TowerGroup senior research director Brian Riley and Ori Eisen, Chief Innovation Officer at 41st Parameter/Experian.

At my Wednesday panel discussion, “Protecting the Digital Payment Revolution,” the spirited discussion started the minute the session began – although we got a full eight minutes in before ApplePay was mentioned.

“The rails” of the payment system infrastructure

One point was crystal clear – that no matter how revolutionary new digital payment methods may seem, all of the current crop (with the notable exception of Bitcoin) have traditional payment cards as their foundation. As such, all of these transactions are conducted on the “rails” (payment network infrastructure) built more than 40 years ago.

“It’s like MS-DOS and Microsoft Windows,” Ori analogized. “You can put a fancy GUI on... [Read More]

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Analytics & Optimization Stuart Wells’ FICO World Keynote: The Big Data Way

Stuart Wells

At FICO World 2014, FICO CTO Stuart Wells talked about how we are applying Big Data Analytic software to meet an array of challenges and business needs. He specifically touched upon the ways that FICO is using Big Data Analytics software to help its clients address customer value, anticipate criminal activity and tackle an elevated regulatory environment. During his keynote, Wells showcased several new technologies.


In creating customer value, one of the biggest challenges for enterprises is that they can’t trust the data. Often the business user is the person who would benefit most from the analytic insights. But she isn’t a data scientist. She isn’t IT; she doesn’t know how to put the data into a system. And thus, she can’t extract value from the data, because she doesn’t trust it.

Wells described the five fundamental Big Data imperatives for the business user. They want to:

Use as... [Read More]

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