Fraud & Security Hacked ATMs Lead to 70% Rise in Debit Card Fraud

ATM with Hacked stamp
Mar292017

The latest fraud news from the FICO® Card Alert Service, which monitors hundreds of thousands of ATMs and other readers in the US, is bad. In fact, it’s doubly bad: The number of payment cards compromised at U.S. ATMs and merchants monitored rose 70 percent  in 2016. The number of hacked card readers at U.S. ATMs, restaurants and merchants rose 30 percent in 2016. This new data follows a 546 percent increase in compromised ATMs from 2014 to 2015. Here’s some more details: About 60% of the compromises were at non-bank ATMs, such as those in convenience stores. The rest took place at bank ATMs or point-of-sale (POS) devices, such as card payment machines at retailers. The average duration of a compromise continued to fall — on average, an ATM or POS device would be compromised for 11 days, compared to 14 days in 2015. The 2016 average duration is... [Read More]

Leave a comment

Risk & Compliance How to Rate Trade Credit Risk – Without Much Data

Darth Vader meme: I Find Your Lack of Data...Disturbing
Mar282017

Allowing people or businesses to pay for things on credit is an ancient practice, and just as ancient is the dilemma: How can you tell if they will pay you back? We know how this works when lending to individuals, but sometimes granting trade credit is trickier. I recently went to visit a new FICO client who are involved in the bunkering industry. Bunkering is the business of providing fuel to shipping, and our client offers credit lines to cruise lines, oil firms and any company that needs to fill up its large vessels with black gold and all its refined derivatives. Like any other institution that offers trade credit (typical firms will pay a bunkering firm within 30 days for the fuel it has purchased), they have a bad debt problem, which is particularly important in an industry with small margins. Although some bunkering firms have turnovers well into... [Read More]

Leave a comment

Fraud & Security Same-Day ACH Requires AI-Powered Fraud Protection

Mar272017

On Groundhog Day 2017, I was thinking that the payments industry is a lot like Groundhog Day, the movie. There are an awful lot of repeating themes in the payments world. And in the best case, they can teach us invaluable lessons. Payments speed is one of those recurring themes. Four years ago, we at FICO started saying it’s time for banks to upgrade fraud protection in their retail banking departments. Otherwise, financial institutions could wake up one day—Groundhog Day?—and realize that it’s too late; fraudsters will have figured out how to hijack funds flowing out of checking accounts. Today could be that day. Are banks truly ready for same-day ACH? Between the Same Day ACH initiative launch on September 23, 2016 and December 31, 2016, there were more than 13 million same-day ACH transactions. A significant 14% were person-to-person (P2P), a pretty astonishing amount for a brand-new payment type.... [Read More]

Leave a comment

Analytics & Optimization Why FICO Was Named a Leader in Predictive Analytics

Woman with Predictive Analytics Formulas
Mar222017

Great news, FICO was named as a leader in the March 2017 report, The Forrester Wave™: Predictive Analytics and Machine Learning Solutions, Q1 2017. This is an honor, and it underscores for us the value and positive business impact our analytic solutions continue to deliver. These types of technology evaluations are really useful for organizations needing guidance as they enter into new strategic ventures. With plenty of attention on the promise of advanced analytics and machine learning, this report from Forrester is very timely. The report highlights: The Predictive Analytics and Machine Learning (PAML) Solutions market is “hot,” with Forrester forecasting “a 15% compound annual growth rate (CAGR) for the PAML market through 2021.” The true essence and core value of predictive analytics, stating “enterprises that can make probabilistic predictions about customers, business processes, and operations will have an edge over enterprises that can’t.” Machine learning is fundamental to artificial... [Read More]

Leave a comment

Analytics & Optimization Defining Your Decisions Is Easy – and Free

Decision diagram for Should I Stay or Should I Go
Mar222017

“Should I stay or should I go now? Should I stay or should I go now? If I go there will be trouble An’ if I stay it will be double So come on and let me know Should I stay or should I go?” – The Clash The lyrics to the 1981 song “Should I Stay or Should I Go” by The Clash express the struggle in making what seems like a simple decision. The complexity increases when decisions are being made in organizations, because of the constraints, logic and significant impact they have on time and resources. To add to the challenges, other people in your organization may want to understand how you arrived at a decision, modify the logic that was used for the same application, or even make decisions in other scenarios with similar logic. Following someone else’s decision logic and maintaining consistency can be very... [Read More]

Leave a comment

Fraud & Security 5 Reasons Cyber Scoring Is the Next Big Idea for Credit Unions

Cybersecurity posture score dial
Mar212017

The greatest risk to credit unions and CUSOs today is the loss of your members’ trust and financial safety. Can your institution survive a cyber breach? Understanding your cyber risk is a critical part of protecting yourself and your members. That’s why we launched the FICO® Enterprise Security Score last year. And now, our cyber score has been selected as one of 5 big ideas to be presented at the National Association of Credit Union Service Organizations (NACUSO) 2017 Network Conference “Next Big Idea Competition.” Why is cyber scoring the next big idea for credit unions? Fraud/cybersecurity is the top priority for credit union CEOs and, by extension, CUSOs. Today’s breach risk measurements are inadequate and inaccurate. They’re manual rather than scalable, judgmental rather than empirical, point-in-time rather than predictive. ESS is rapidly deployed. You don’t install software, you just throw a switch. ESS is multi-tenant, so CUSOs can rapidly... [Read More]

Leave a comment

Risk & Compliance NBC News Probes Two Changes That Could Boost Credit Scores

NBC News Credit Scores Video - retro reporter image
Mar202017

NBC Nightly News recently aired coverage where they examined two changes that could boost credit scores for millions of US consumers. The news agency examined last year’s announcement of FICO® Score XD, aimed at the millions of US consumers who otherwise cannot receive a FICO® Score due to insufficient or stale data in traditional credit bureau files. NBC News discussed how the new score leverages alternative data, such as utilities payments and wireless and cable bill payment history, to determine credit scores. And starting July 1, the three major credit reporting agencies are dropping certain negative information from credit reports, including tax liens and civil judgments. NBC Nightly News shares FICO estimates that 12 million consumers will see their FICO® Scores increase – although, roughly 11 million of these consumers will see only a slight score increase of less than 20 points. View the NBC Nightly News video: Changes to Credit... [Read More]

Leave a comment

Collections & Recovery Why GDPR Is a Four-Letter Word for Collectors

GDPR logo
Mar202017

Collectors in Europe who have been ignoring GDPR because it was risk’s problem, or the CIO’s problem, or the compliance team’s problem should think again. GDPR could well be a four-letter word for collections. You’re probably familiar with the General Data Protection Regulation, Europe’s attempt to create a single, enforceable standard to protect the freedom and rights of EU citizens. But you might not have thought much about it from a collections perspective. I just presented a webinar on GDPR in collections, so I’ve got an hour’s worth of material if you want to listen to it. However, I’ll keep it brief here and just give you 11 takeaways to ponder: 1. It applies from 25 May 2018. You have a year to get comfortable with it. 2. It’s not just about social media data. That’s how it started, but it broadened into an all-encompassing piece of regulation by the time it... [Read More]

Leave a comment

Risk & Compliance Do ‘Digital-Only Banks’ Have a Future in Asia?

Mar162017

Imagine a scenario where banks offer their services digitally; not as an ad hoc feature but as a fully integrated mobile experience. A digital-only bank that allows customers to do everything on their smartphones, from opening a new account to making payments, settling credit card bills to resolving disputes, all without having to go to a physical branch. If this vision sounds premature, then perhaps it’s time to update your view of what’s happening worldwide. This was the bold proposition offered by McKinsey & Company’s Sonia Barquin who presented at FICO’s Asia Pacific Chief Risk Officer Forum held this week in Thailand. Banks worldwide are fighting back against fintech start-ups looking to cut their lunch with low-cost banking offerings. Barquin pointed out that some global banks are developing digital-only offshoots while others are bringing the philosophy and business model to their main bank offering. Sonia encouraged the participants to be... [Read More]

Leave a comment

Fraud & Security Why the Panama Papers Leak Was Good for KYC

Panama Papers illustration
Mar132017

For many banks, KYC — Know Your Customer — means asking them how they intend to use a product, where the funds are coming from for their new account, etc. At the same time, the bank will check the customer against sanction lists, PEP (politically exposed persons) lists, and so forth. It’s not enough. Some hard evidence that it’s not enough came in 2016, when the so-called Panama Papers leak revealed that thousands of people worldwide owned a shell company in one of the countries covered. This was, needless to say, not something those individuals had disclosed to their banks. Should banks care? Absolutely. Under the KYC requirements that are part of current regulations, such as the 4th EU Money Laundering Directive and the fifth pillar of the BSA, the bank needs to know the business of their customers. If a customer owns an offshore company, it’s quite possibly so... [Read More]

Leave a comment