Risk & Compliance New Compliance Asks: Is Your Risk Data Management Sound?

Compliance
Jun302016

Have you got a handle on IFRS 9, CECL and BCBS 239? If not, and it all just sounds like regulatory alphabet soup, it’s time to familiarize yourself with these critical acronyms. All three requirements highlight the need for financial institutions to ensure the quality of their risk data. Aggregation and effective use of this data are becoming key to meeting new compliance challenges, not to mention an opportunity to derive additional business value. So what specifically are all these acronyms? Here’s a quick overview: IFRS 9 – IFRS 9 is a new international accounting standard that was adopted by the International Accounting Standards Board (IASB). In the aftermath of the financial crisis, the IASB believed that the accounting standards in use (specifically IAS 39) failed to highlight the losses that firms would face because they were based on past events. With the adoption of IFRS 9 beginning in 2018,... [Read More]

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Customer Engagement Are We Asking the Right Questions of Our Customer Data?

Customer data
Jun282016

You have customer data coming out your ears Chances are excellent that you have amassed a great deal of quantitative and qualitative data about your customers: demographic, transactional, social, behavioral, perhaps even emotional. Some of it is structured; some of it isn’t. Becoming more adept at slicing and dicing that data in ways that help you make better operational and business decisions is critical. Where most organizations fail, however, is in not analyzing their data from their customers’ points of view. We’re so focused on products, processes and profits that we forget to look at what’s important to customers. And that’s no less critical. Ask the right questions Take, for example, these two questions a business may consider in determining what call center improvements they should make: “How can we reduce costs in the call center?” “What frustrates customers when they contact the call center?” Both are valid—even vital—questions. The... [Read More]

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Customer Engagement Cash or Credit: A Millennial Story

CashorCredit
Jun222016

Last year Millennials surpassed Baby Boomers as the largest generation in the U.S. (Pew Research, 2016). Millennials (those born between 1997-1981) now number 75.4 million, just pipping the Boomers at 74.9 million. The Millennial generation came of age during the Great Recession and some studies from Bankrate and others, have shown they are credit averse, and favor debit cards over credit cards. However, new FICO research points to just the opposite. Yes, I’d like a Credit Card. There is no doubt that the Card Act of 2009 reduced the number of credit card carrying adults under the age of 21 which was its intended impact. Indeed, FICO’s research shows that just 64% of Millennials 18-24 have credit cards. However, older Millennials 25-34, now own cards at a higher rate (83%) than Generation X or those 50 and older. So what do Millennials want in a credit card? Millennials are particularly... [Read More]

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Analytics & Optimization Decision Fundamentals: Building Institutional Memory

Elephants
Jun212016

This is my fourth of five blogs expanding on the key points of my FICO World 2016 address. Through these blogs I’m exploring the fundamental ways organizations need to improve their operational decision-making. Organizations can reduce complexity and create competitive advantage through: 1. Capturing subject matter expertise 2. Intelligent solution creation 3. Faster insight to execution 4. Building institutional memory 5. Greater analytic accessibility Let’s talk about institutional memory. How Elephants Survive In my FICO World presentation I included a slide with a photo of elephants—not the usual stuff of a corporate deck. But a tale about elephant survival in Tanzania’s Tarangire Park provides a valuable allegory for business. The Wildlife Conservation Society examined patterns of elephant calf mortality during the park’s drought of 1993. The drought was the region’s most severe in over 40 years. Sadly, during a nine-month period of that year, 16 out of 81 elephant calves died. This mortality rate of... [Read More]

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Risk & Compliance EU’s General Data Protection Regulation Is Right to Be Tough

European flags in Strasbourg
Jun202016

European data privacy became global news in 2014, when a man in Spain sued Google for “the right to be forgotten,” or RTBF. (That lawsuit is still not over.) RTBF is part of the European Commission’s (EC) General Data Protection Regulation (GDPR), a data protection framework for the European Union (EU) that “will bring in sweeping changes and place new obligations on any business that handles the data of EU citizens, independent of where the business is located.” In fact, GDPR has been in development for years. It is a complex regulation that addresses a broad range of issues related to data protection and privacy, including: Consent Data breach notifications Penalties for breaches Obligations for data processors RTBF and much more Deloitte Netherlands has published a straightforward overview of GDPR; here’s another overview from a law firm that is more qualitative. If you’re looking for quick-and-dirty, this highlights blog from Stanford... [Read More]

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Collections & Recovery Outsourced Collections – Get Your ROI and ROO

looking-at-screen
Jun162016

Did you know that almost half of all credit issuers – including banks, telecoms, government agencies, healthcare organizations and other credit issuers — place delinquent debt with third-party collection agencies? It’s easy to see why. Creditors often don’t have the capacity or time to devote to recovery activities. Collection agencies focus on effective data use, and are adept at analyzing, identifying and segmenting consumers as part of the recovery process. They’re focused on the compliance front as well, having faced more headlines and court decisions on this topic in 2015 than ever before, with no slow-down in sight. Larger participants are growing ever larger, and the focus is 24/7 on the consumer. We’re seeing the dynamics within the third-party space change from family-organized to corporately-owned. Mandated audit capabilities are driving collectors to communicate more skillfully in a consultative manner in a variety of channels. The times, they are a-changing. But... [Read More]

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Analytics & Optimization Decision Fundamentals: How to Go from Insight to Execution Faster

Title against city background
Jun152016

I’m continuing my blog series, taking a deeper dive into the core concepts of the keynote I delivered at FICO World 2016 in Washington, DC. Those concepts capture the five critical areas that organizations need to improve, to fundamentally enhance operational decision-making: 1. Capturing subject matter expertise 2. Intelligent solution creation 3. Faster insight to execution 4. Building institutional memory 5. Greater analytic accessibility Let’s look at the critical effect of gaining faster insight to execution, and how modern software solutions like FICO® Decision Management Suite 2.0 (DMS) catalyze this advantage. Fresh Insights Business isn’t run on a static set of facts; the knowledge we use to make business decisions is constantly evolving. At FICO we build solutions to reflect that reality by giving business users the ability to quickly adapt, test and modify strategies. Business analysts may want to test how previous decisions can be improved with champion/challenger, and when fresh insight is generated... [Read More]

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Fraud & Security What’s Your Organization’s Cyber Score?

Meter for cybersecurity risk
Jun142016

What if there were clear measure that told you how protected your organization is from cyber threats? The potential benefits of such a score are clear. It could help security professionals address gaps, and help the boards of public companies prioritize security investments. It could also enable third parties, from partners and potential customers to insurers, understand a firm’s security risk. This is precisely what FICO is developing: a FICO® Enterprise Security Score to rank an organization’s level of cybersecurity risk. Today we announced that we have acquired QuadMetrics, an innovative cyber risk security scoring company, to further this effort. We see the FICO Enterprise Security Score as an essential complement to FICO® Falcon® Cybersecurity Analytics for threat detection. With the acquisition of QuadMetrics and the infusion of FICO’s analytic scoring methods, FICO will provide both cybersecurity defences and an enterprise-level “cyber score” that gives an empirical, impartial measure of... [Read More]

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Fraud & Security How You Handle Fraud Will Make Millennials Drop or Love You

Quote: "Contrary to popular perception, Millennials exhibit brand loyalty when presented with a favorable experience."
Jun092016

Millennials, now the largest demographic group in America, are possibly the most misunderstood, elusive market ever, a notion underscored by The Wall Street Journal’s article about the existence of $20,000-per-hour “Millennial consultants.” The Journal reports that companies like Oracle, HBO and Red Robin retain these consultants to help “stem turnover, market to young people and ensure their happiness at work.” If your company is a bank or a card provider and you’re wondering how make Millennial customers happy and retain them, you don’t need to run out to hire a very expensive consultant, or launch a huge advertising campaign. At least not yet. I have some information that can help you. Millennials reward positive fraud outcomes FICO’s latest research on consumer banking trends has revealed that 22% of US consumers will close an account after a fraud incident, while 29% of Millennials will close all accounts with that bank. In... [Read More]

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Collections & Recovery In Debt Collection, A Is for Agility

Cabot logo
Jun082016

I could start out today by telling you all about Cabot Credit Management. About how they’re a market leader in debt purchasing, contingency collections, process outsourcing and litigation, supporting 600 users over five sites in the UK and India. Or how recent mergers – with Cabot Financial, Apex Credit Management and Marlin Financial Services – created a long list of complex challenges.  I could mention how growth was accelerating, with plans for additional acquisitions, using different currencies and languages. But forget all that. The theme today is one word:  Agility. Their challenge was how to retire an aging collections platform and become more efficient in their debt collection. How does one align the troops, when many of their staff members were new to this merged environment?  Or keep up with ongoing regulations and requirements from the Financial Conduct Authority?  Historical data and information was uneven and it was hard for... [Read More]

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