Risk & Compliance FICO Research: Student Loan Explosion Hurts Other Borrowing

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The student loan crisis in the US is getting much worse — student loan debt is over $1.3 trillion and is increasing by more than $2,700 per second. Lenders cannot ignore the impact of that debt on individual borrowing. Our latest research shows that: The number of US consumers aged 25-34 with student loan debt of at least $50,000 doubled from 2005 to 2015. During that same time, the average student loan debt across all age 25-34 consumers also doubled — by comparison, average credit card debt and mortgage debt for this population actually fell. While the number of consumers age 25-34 with student loans grew from 2005 to 2015 (from 27% of this population to 40%), there are fewer 25-34 year olds with mortgages or credit cards than 10 years ago.   In fact, our data shows that people with active student loans are far less likely to have... [Read More]

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Fraud & Security Do You Know Your Cyber Score?

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There’s one piece of information that every financially savvy American knows: their FICO® Score. And if that consumer is looking to secure any type of credit, the party on the other end of the transaction will use the FICO Score to critically inform an important decision: should my organization assume business risk by transacting with this person? Now, in conjunction with National Cybersecurity Awareness Month, FICO is launching the new FICO® Enterprise Security Score (ESS), a metric that quantifies the vulnerability of an organization to cyber attack. This score can be used by an enterprise to understand its cyber risk and shore up defense gaps. The FICO Enterprise Security Score can also be used as an assessment tool by third parties such as cyber insurance providers and potential business partners. A score that quantifies cyber risk Scores and decisions are a big part of FICO’s DNA, reaching back to the... [Read More]

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Analytics & Optimization Fast, Personalized Insurance Decisioning: Q&A with Infosistema


Infosistema, a business and technology consultancy, wanted to build a solution that would help its insurance company clients create a personalized experience for each prospect and customer. Working with FICO, the company now can build flexible and customizable auto insurance pricing and life insurance underwriting decision-making solutions, with advanced simulation capabilities, in eight weeks. I recently had the chance to speak about this with Alexandre Lee, Partner and Board Member at Infosistema. Q: Can you please tell me a bit more about Infosistema? Alexandre: Infosistema is a consultancy focused on insurance and banking. We offer web portals, mobile applications, business process management solutions and service-oriented analytics to help insurance and banking institutions all over the world. Our focus is on staying innovative by investing a lot in research and development for our products. Q: What business challenges were you looking to solve when you teamed up with FICO? Alexandre: As... [Read More]

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Fraud & Security Cybersecurity: Predicting Yesterday’s Crimes

Minority Report

Sometimes, even when a vulnerability is identified or a threat properly qualified, it is too late to do something about it. The crime has already taken place. This is the antithesis of the future seen in the Spielberg movie Minority Report, where seers expose “PreCrimes.” In today’s security world, we’re less likely to find something about to happen, or even something happening now, and more likely to find something that happened long ago. Here’s what I’m talking about. Earlier this year, IDG polled security “experts” to predict the “single biggest security threat of 2016”. The brief was to sum this risk up in just one sentence. My contribution was: “The biggest single security threat is cyber – more specifically, for business and political entities it is probably nation state espionage and APT (advanced persistent threat) actors.” It was a view, from the survey, shared by only about 8% of my... [Read More]

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Fraud & Security FICO Blogger Scott Zoldi Named to Analytics 50

Analytics 50 award

One of the key contributors to this blog, Dr. Scott Zoldi, has just been named one of the winners of the first Analytics 50 Awards by Drexel University’s LeBow College of Business and CIO.com. The awards program honors 50 executives who are using analytics at their organizations to solve business challenges. Scott, who is FICO’s chief analytics officer, received the award for his leadership in developing new analytic technologies to reduce payment card fraud, by detecting rapidly changing criminal methods. He led the development of a patented adaptive analytics technology and multilayered self-calibrating analytics, deployed in the company’s FICO® Falcon® Platform, which protects 2.6 billion payment cards worldwide. This solution can leverage a client’s fraud experience in near real-time to adjust model weights, without the need for time-consuming off-line training. FICO also created a patented technology called behavior-sorted lists, which identifies an individual cardholder’s specific spending patterns at preferred merchants and... [Read More]

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Risk & Compliance New CRA Guidance Promotes Use of Alternative Data in Lending

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The potential of alternative data in consumer lending decisions continues to be a hot topic in Washington, D.C., with the latest evidence seen in developments related to the Community Reinvestment Act (CRA). When federal banking agencies recently revised their Q&As for CRA compliance, their focus on the use of alternative data caught my eye. This development is welcome news for those here at FICO and for our many existing and prospective customers. Adopted in 1977, the CRA is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods. The Act requires federal banking agencies (the OCC, FDIC and Federal Reserve – “Agencies”) to conduct periodic reviews of each depository institution’s efforts in this area. CRA regulations provide various methods of evaluating bank performance, corresponding to differences in institutions’ asset sizes, structures and operations. After a thorough assessment... [Read More]

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Risk & Compliance Research Shows Mortgage Delinquencies Rise for Older Consumers

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FICO research consistently shows that older consumers have higher FICO® Scores than their younger counterparts. But a recent report by the Mortgage Bankers Association (MBA) provides evidence that people become less reliable at making their mortgage payments as they age. Can both of these assertions be right? To get to the bottom of this, FICO conducted fresh research on credit behavior trends by age. Our study revealed not only that mortgage delinquency rates rise for US consumers beyond a certain age, but that these delinquency increases were observable across other loan types. Is this cause for concern? And was the MBA correct in their conclusion that declining memory and other cognitive skills are the main contributing factor? In this post, I’ll share our research findings and draw a few conclusions based on what we see in the data. Delinquency Trends by Age For this research, we examined payment behavior using... [Read More]

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Fraud & Security Channel NewsAsia Video: Online Gaming—New Avenue for Money Laundering?


Singapore Tonight, the evening news program of Channel NewsAsia, recently aired a story on money laundering in online gaming. It highlights how criminals, attempting to avoid detection by the authorities, may turn to less-regulated channels such as online games to launder money. The feature touches on how analytics can play a crucial role in preventing financial crime by discerning suspicious patterns in transaction data. It also points out that the global video games market is projected to hit $100 billion in revenue this year with an average annual growth of 6% through 2019. For the story, Channel NewsAsia interviewed FICO’s Subhashish Bose, as well as representatives from PwC and the Monetary Authority of Singapore (MAS), the nation’s central bank. Click on the image above to view the Channel NewsAsia video “Online gaming – a new avenue for money laundering?” or view it here.

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Customer Engagement FICO Survey: Are Millennials Embracing Mobile Payments?


Millennials love their smartphones—so much so that in recent research, millennials ranked them as more important than a toothbrush or even deodorant. It is a good thing 90% of millennials have smartphones! Of course, many of our clients want to know more about millennial banking habits. FICO’s latest US consumer research survey found that large numbers of millennials are using their bank’s mobile application regularly. Some 66% use the app several times a week, and 30% use it daily. This is great news for banks because it provides them an amazing opportunity to play a central role in the lives of their customers. I’ll spend some time in a future post talking about using those phones for different types of financial-related communications, but today I wanted to focus on mobile payments. If millennials love and have phones, and trust them to conduct banking transactions, how do they feel about using them... [Read More]

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