Risk & Compliance FICO Research: Broader Mix of Consumers Obtaining New Mortgages

Abstract graphic of house
Aug152018

For many people, owning a home is still a significant milestone in their financial and credit journey. We recently studied the impact of millennials’ student loan debt on their willingness and ability to obtain new mortgage loans. As the housing market continues to remain competitive, we looked at key trends in FICO® Score distributions and default rates for those who have proven they would like to and are able to obtain mortgage loans. The first clear trend observed around newly originated mortgages is that as we get further away from the Great Recession, underwriting criteria seems to have eased and a broader section of consumers are obtaining mortgages as a result. Figure 1 contains a FICO® Score distribution for mortgages opened in different periods between 2009 to 2017. We see that the percent of new mortgage account openings with FICO® Scores less than 750 has climbed significantly in recent years,... [Read More]

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Analytics & Optimization Ignite Machine Learning with Decision Rules

Chalkboard with Machine Learning on it
Aug152018

When today’s businesses create a list of must-haves in the race to alter and ultimately transform how they operate, machine learning is one of those checkbox necessities. And indeed, when you run the gamut of business-consumer touchpoints, machine learning is, indeed, one of the mainstays. What’s machine learning, and why is it needed? Machine learning is powered by algorithms that learn from data, identifying critical patterns, connections and insights – without being programmed to reach specific conclusions. Machine learning enables more data of multiple types to be analyzed quickly, in order to derive maximum benefit from it. It takes advantage of exponential boosts in data storage capabilities and computing power (at a fraction of the cost than what was previously possible) to help make faster, smarter decisions while constantly learning, evolving and providing unexpected new insights. Where machine learning models are superior to traditional approaches One of the core benefits... [Read More]

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Fraud & Security Cybersecurity Insurance — But Not Full Coverage

cybersecurity insurance
Aug152018

The number of UK firms with cybersecurity insurance has risen in the past year — but less than half say their cyber insurance covers all risks. The second annual cybersecurity survey from research and consultancy firm Ovum, for Silicon Valley analytics firm FICO, found that the number of UK firms reporting they have no cybersecurity insurance dropped from 31 percent in 2017 to 10 percent in 2018. While this is substantially better than the 24 percent reported across all 11 countries surveyed, only 38 percent of UK respondents said their cybersecurity insurance covers all risks. Cybersecurity Insurance – Telcos still lack coverage Telecommunications firms were the most likely to have no cybersecurity insurance — 17 percent reported this, compared to just 5 percent of financial services firms. (This shows that not much has changed in the industry since last year as per the findings in our e-book “Cybersecurity for Telecoms –Views... [Read More]

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Analytics & Optimization Unlocking Decision Automation with a 5 Stage Workshop Approach

Digital assets
Aug092018

Automation has played a fundamental role in enabling businesses to make better, more consistent and more strategically sound decisions. Increasingly sophisticated cloud-based software has given organizations the capacity to define the policies and regulations that drive decisions, and then to incorporate analytics into models – decision services – that can be refined to account for changing conditions. But software is only the toolset. Decision automation can be effective only as an enabler for an effective process to decide what decisions to support using decision services, and how those services will be used to drive business processes. For that purpose, a proven, documented process is required. FICO facilitates decision service development for its clients using a methodology called Decision Requirements Analysis (DRA), developed by Dr. Alan Fish, Principal Consultant, FICO Decision Solutions. DRA focuses decision-makers’ attention on a domain of decision-making and decomposes it into a network of decisions, which are... [Read More]

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Risk & Compliance Expenses Abuse: What Is The Cost Of A $4 Beer?

Expenses Abuse
Aug062018

Expenses Abuse Gets Media and Tax Payers In A Froth Recent news articles out of Ohio ($4 beer dings Butler County Visitors Bureau in state audit) highlights the reputational risks that can impact an organization when it fails to monitor spending for non-compliance or expenses abuse.  The audit uncovered a single $4 Beer which was part of a payment for $11,554. While the applicable statues clearly prohibit this purchase from being reimbursed, it is important to put this in perspective. This was a single $4 purchase and it represents 0.035% of the total amount. There are many ways this reimbursement request could have been identified. If the expense request had been stopped because a supervisor had noticed the purchase during the approval process, or an automated system had identified the non-compliant item then the requestor would simply have removed the item, and the remaining amount would have been reimbursed.  In this... [Read More]

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