Collections & Recovery Regulators Hash Out Debt Collection Compliance at FICO World

FICO World 2014 logo
Oct232014

Keeping up with the wave of regulatory changes in the debt collection market is no easy task. That’s why we’re hosting representatives from the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB), along with a legal expert, at next month’s FICO World panel, “Debt Collection: Staying on Top of the New Regulatory Landscape” (under the Regulatory Compliance track). This all-star panel, which I’ll be moderating, will cover a range of current regulatory topics in the debt management space. We’ll discuss hot-button issues such as the CFPB’s advance notice of proposed rulemaking, vendor management, rising consumer complaints, data integrity and recent enforcement actions. And of course, we’ll invite attendees to ask our expert panel their most pressing questions. In addition to this FICO World panel, I encourage you to check out sessions in our Debt Management track. We’ve invited a number of clients to share their experiences and successful... [Read More]

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Collections & Recovery See How BMW Improved the Collections Customer Experience at FICO World 2014

BMW 2
Oct222014

BMW offers personalized leasing and financing to BMW customers. Their standards are high, and they want their communications with these customers to be just as personalized.  They’re looking to stay in touch with their customers throughout the life cycle of their financial relationship, from origination to end of term.  They want to follow up on sales opportunities, too. But the process wasn’t happening the way they wanted it to. Like a lot of organizations collecting debt, they weren’t satisfied with the customer experience they were building. Right-party contact rates were too low, outbound calls went in peaks and valleys,  and communication channels weren’t integrated. That was then. Now, BMW is reaching out to customers using automated technology and a variety of communication channels. Rather than conducting rote campaigns, they’re treating each customer case in a personalized manner, using real-time integration and case refresh capabilities. They’ve also almost doubled their early-stage... [Read More]

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Analytics & Optimization Machine Learning and the Terminator Apocalypse

Machine Future
Oct222014

In the movies, the machines will become our enemies. In The Terminator, the rise of the machines leads to an apocalyptic future; in 2001: A Space Odyssey, Frank is murdered and Dave is locked out of the spaceship by HAL; and in The Matrix, humans are used as a power supply after the sun is blacked out. No wonder we’re a bit afraid of the machines. While these machine-controlled futures are rather unrealistic, many businesses today are in danger of an increased reliance on machine learning as the end all, be all of data analytics. Let’s face it, data science talent is scarce. And as more businesses are forced to consider full integration of analytics into their decision-making processes, a machine learning-only solution with limited human oversight is tempting. But this approach exposes us to potential risk … eerily similar to those in the movies. Here is how the scenario... [Read More]

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Risk & Compliance Can Focusing on Basel II Increase Your Bank’s Bad Debt?

Compliance
Oct212014

Are bad modelling practices creeping into some retail banks under the auspices of Basel II compliance? I built my first credit scorecard nearly 20 years ago, and these days I regularly work with retail banks on their approach to the predictive model lifecycle, from undertaking health checks to improving efficiencies and insight. Recently for a few banks, a concern struck me: their interpretation of Basel II regulations seems to influence their credit scorecard development methodology in ways that could increase their bad debt levels. There are a number of aspects to this, but in this blog, I’ll focus on: The use of Basel II defined PD models as the primary credit risk assessment The primary purpose of Basel II PD (probability of default) models is to input into IRB Regulatory Capital Calculations, which in turn provide for comparative measures across organisations. Consequently, a standard default performance definition is required (90... [Read More]

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Fraud & Security Enterprise Fraud Award-Winner Speaks at FICO World

FICO World 2014 logo
Oct202014

Taking an holistic stance when trying to defend against fraud has long been the aspiration of banks keen to minimize loss, improve operational efficiency, and to preserve customer service. But an enterprise-wide approach eludes many, especially those grappling with legacy systems, disparate customer records and multiple stakeholders needed to effect the necessary change. At FICO World next month you can hear from a senior stakeholder from Garanti Bank about their success in enterprise fraud management. Garanti is known as an innovative and progressive banking organization that has grown to be the second largest in Turkey’s vibrant financial services market. You’ll hear about Garanti’s creation and implementation of an enterprise strategy, and their choice of the FICO Falcon Platform to connect their defenses. Their system protects on-boarding for credit cards and consumer loans as well as transactional management for credit and debit cards and current accounts. Garanti’s success in this endeavor... [Read More]

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Risk & Compliance Banker Survey: Wealth Gap Poses Growing Risk

risk-meter
Oct202014

In our latest quarterly survey of North American bank risk managers, we asked about the widening wealth gap. I was a bit surprised by the intensity of the response. More than six in ten (62%) respondents agreed “the wealth gap poses a growing risk to the financial system.” Only 14% of respondents disagreed. I think this is a case of bank risk managers putting on their “ordinary citizen” caps. This issue has received a great deal of attention lately, and we are all becoming more attuned to it. Bank risk managers notice when the pool of people who are thriving is squeezed. They are acutely aware of the long-term implications of this trend for an economy that is driven by consumer activity. However, despite the concern about the wealth gap, there was some positive news in our survey results. For the first time in four years, a sizeable majority (59%)... [Read More]

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Risk & Compliance President Obama Encourages Consumers to Check FICO Scores

Whitehouse
Oct172014

President Obama signed an Executive Order today intended to improve the security of consumer financial transactions. In related remarks, he recognized the importance of consumers checking their FICO Scores regularly. Not only can doing so help consumers manage their financial health, it can help people protect themselves from financial crime. The President explained that “a sudden drop in your credit rating is one of the clearest signs that you’ve been hit by fraud.” With FICO CEO Will Lansing in attendance, President Obama went on to praise Citi as the latest bank to join FICO Score Open Access, noting that “Citi is joining other financial institutions in making free FICO Scores available to customers.” FICO® Score Open Access was launched in November 2013 with participating financial institutions offering free FICO Scores to eight million eligible credit card account holders. By early 2015, that number will exceed 60 million. And the program... [Read More]

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Fraud & Security Three Opportunities Among Fraud Threats

Beseiged businessman
Oct162014

As my colleague Brian noted in his last post, our EMEA Fraud Forum last week generated interesting discussions among fraud leaders from several of the region’s top banks. Three things stood out for me — all of them presenting opportunities to financial institutions. First, what we think of as “fraud” is increasingly bleeding over into the area of cyber security. In light of recent data breaches, financial services providers need to step up and become the preferred guardian of consumers’ data, not just their money. Second, there is an opportunity to involve consumers in identifying and protecting against fraud. This is critical, as banks have to balance better fraud protection with an improved consumer experience. In some cases, proposed legislation might even require consumer opt-in to enable certain anti-fraud programs. Third, fraud is a moment of truth for consumers. How you handle fraud when it occurs can be a point... [Read More]

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Analytics & Optimization FICO World Webinar: Text Analytics 101

Text Analytics 101
Oct152014

Buried in your notes, documents, email, survey results and social media is a gold mine of useful data – but finding that value is hard, real hard. In a FICO World Preview webinar, titled “Text Analytics-What It Can Do for You,” FICO’s Colette Glaser walks through how you can take advantage of the 85 percent of your data that isn’t used because it’s unstructured. Unstructured data is intended for human consumption, not for machine consumption. It is messy, filled with noise and misspellings, and reflective of highly specialized domain and language needs. The growing field of text analytics is introducing new technologies and methodologies to tackle these challenges and get to the heart of your unstructured data. We invite you to listen to the replay of this FICO World Preview webinar as an excellent primer to text analytics. And if you are interested in learning more, you can attend Colette’s... [Read More]

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Risk & Compliance Credit Research Part 2: The Recession and Homeownership

Risk_Housing image 2
Oct142014

In my last post, I examined the increase in mortgage charge-offs during the Great Recession, and how those rates have mostly returned to pre-recession levels. In this post, I’ll share new research on a key consequence of those increased rates—namely, its impact on homeownership. As you might expect, fewer consumers have mortgages now than before the recession, and the rate at which new mortgages are being opened is still far below what we saw in the boom before the crisis. In our study, we compared performance across six Metropolitan Statistical Areas (MSAs): New York, San Francisco and Washington DC as examples of areas that endured the recession relatively well, and Las Vegas, Miami and Phoenix as areas that were harder hit by the recession. The following table shows that the percentage of consumers with at least one mortgage (balance greater than $0) has declined for all six MSAs. This is... [Read More]

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