The introduction of Strong Customer Authentication will impact all PSPs but there will be winners and losers, and those that can effectively communicate with their customers and steer them through the process stand to be the winners.[Read More]
Government agencies are often challenged in their effort to optimize communications with their citizens. Most government executives want to increase the frequency and quality of their interactions, but tightening budgets have resulted in fewer interactions, not more. [Read More]
NCAP medical collection removals are rare and have no material impact to FICO® Scores.
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As I discussed in a previous blog, consumers have not been extensively educated on the impact that PSD2 will have on them. Many of the outcomes of PSD2 will be positive – the Account Information Service Providers (AISPs) and Payment Initiation Service Providers (PISPs) will give people access to a range of new services that will help them to manage their money better and give them more flexibility in the payment providers they use. However, the fraud prevention measures that form an integral part of PSD2 will have a knock-on effect for consumers. In some instances, security checks will make initiating a payment more difficult and irritating. Sometimes the checks may even stop it. Poor Customer Management will Impact the Bottom Line We already know that introducing friction into customer transactions is viewed negatively. Many organisations consider losses to abandoned transactions as important or more important as losses to fraud. PSD2... [Read More]
Are Premium cards becoming harder to distinguish from Standard Classic cards? Is there still a place for them in the market? Traditionally, Premium* cards (gold and platinum) were perceived as reserved for the lowest-risk, best-quality accounts, and so had higher limits. Spend was thought to be greater, though a larger proportion of full-balance payers made them less profitable than Classic cards. However, over time the FICO Benchmark Reporting Service data for the UK reveals that the Premium customer is changing and so is the performance, particularly of the more mature accounts. In July 2017 25% of the accounts in the FICO Benchmark Reporting Service were Premium accounts, along with 25% of balances. With the exception of New accounts (<12 months on book), which were 20% of accounts and 20.4% of balances, Established (1-5 years on book) and Veteran (5+ years on book) accounts were about 25% of the relevant vintage population in the service. Common Beliefs... [Read More]
Government agencies are often challenged in their effort to optimize communications with their citizens. Most government executives want to increase the frequency and quality of their interactions, but tightening budgets have resulted in fewer interactions, not more. They’ve stopped sending annual booklets, they send fewer reminder notices and wait for consumers to call them rather than proactively reaching out. Reduced communication results in lower compliance and an increase in downstream problems. At the same time, more people than ever are using smart phones (SMS, email and web apps) and other electronic communication tools. Recent data from Deloitte tells us that 77 percent of Americans own a smartphone and its usage is so ingrained in our daily routine that 61 percent of Americans check their smartphone within five minutes of waking up. How long after you wake up do you check your smart phone? With this as a backdrop, it’s no... [Read More]
The National Consumer Assistance Plan (NCAP) is a comprehensive series of initiatives intended to evaluate the accuracy of credit reports, the process of dealing with credit information, and consumer transparency. In a previous post, we showed that July 2017 NCAP public record removals (civil judgments and some tax liens) had no material impact to FICO® Scores. In mid-September 2017, the three consumer reporting agencies (CRAs) are also scheduled to remove the following from credit reports: Medical collections less than 180 days old Medical collections that are ‘paid by insurance’ FICO recently conducted research on a representative sample of millions of US consumers to assess the impact of the NCAP-driven removal of these 3rd party medical collection agency accounts on the FICO® Score. Our results showed that NCAP-related medical collection removals have no material impact on the aggregate population to the FICO® Score’s predictive performance, odds-to-score relationship, or score distribution. The removal of medical collections... [Read More]
You need to find faster, smarter and more value-inducing ways to get from the data to decisions (and actions) rapidly. Analytics are key to that process.
AI, and more specifically machine learning, are generating enormous buzz in many areas. But are these claims realistic?
A recent article in Information Age named 10 attributes of data leader. Each of the experts quoted discussed just one attribute — in my case, it was separating hype from potential, which is critical when you’re dealing with advanced analytics. Here’s an excerpt of what I wrote for that article: “In the Big Data era, businesses have been told to save every scrap of data because it might turn out to be a valuable clue to customer understanding or business performance. While the cost of storing data has fallen dramatically, it doesn’t represent the true cost of data, which includes ensuring quality, maintaining freshness and mitigating the risk of a breach. “Data leaders are equally discerning about the hype and potential of the analytics used on their data. They focus on the problems the business needs to solve, and investigate new analytic techniques that can make their data “talk” in... [Read More]
The US automotive industry has shown immediate interest in FICO’s new auto finance loan origination solution. It was the big news drop at our Automotive Mastermind event held a few weeks ago in Silicon Valley and has been widely covered by industry media including Automotive News, Automotive Digest and SubPrime. FICO’s Alternative Deal Structures platform, designed specifically for automotive, works within lenders’ parameters and customers’ preferences to quickly produce multiple deal structure options at the point of sale from thousands of options in just seconds. Automotive News reported: “If you look at a typical auto finance scenario today, you might get a single deal structure offered by the underwriter [or] by the dealer, and the customer may or may not like it. If they don’t like it or something unusual comes up, they have to go through the whole rehash process,” Ken Kertz, senior director of FICO’s auto practice, told Automotive News.... [Read More]
If AI is good enough to power self-driving cars, isn’t it good enough to make credit risk decisions? What are the challenges lenders face using AI and machine learning models today? In this podcast for Lend Academy, FICO Blog author Dr. Scott Zoldi talks about his role as FICO’s Chief Analytics Officer, the company’s AI innovations and how they are being applied in credit risk, fraud management and more. Listen to the podcast: “I’m excited that machine learning and AI is the rage again, I think that’s a really positive thing because it’s a tremendously interesting set of technology,” Scott says in the podcast. “What I worry about is it takes a lot of care to properly productionize and operationalize AI. From making sure that models aren’t overtrained, to making sure that you have the proper amount and degrees of freedom, that you really thought about the data you bring into the... [Read More]
In my last post on digital transformation, I talked about how it’s tempting to track your competition in the race to disrupt and transform your industry, but that every business’s DNA mandates an approach specific to your challenges and objectives. When you start to uncover new insights that are transformational, it’s critical to consider one often overlooked fact: You have a lot of hidden data living in your organization that you ultimately need to tap to digitize your business. Where does the data reside? In the brains of your business experts, data scientists — even front and back office staff. And of course, on their PCs, tablets, and even sticky notes and business cards. It’s not just knowledge of their jobs, but the specifics about how they get things done; how they deal with people both in and outside of the company (including customers, partners, vendors and suppliers); and even... [Read More]