Risk & Compliance Research Shows Mortgage Delinquencies Rise for Older Consumers

Worried senior woman, an elderly pensioner counting utility bills at her home, concept of financial security in old age
Sep272016

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?

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Sep262016

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?

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Sep222016

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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Fraud & Security Rise in E-Payments Fraud Demands New Analytics

Fraud locks
Sep212016

Online banking electronic payments fraud is on the rise, as fraudsters explore security gaps in the emerging banking channels. For instance, data released by Financial Fraud Action UK, shows that UK online banking fraud losses increased by 38% in 2014 from 2013, and by 64% in 2015 from 2014. The rapid growth of fraud losses calls for an effective e-payments fraud prevention solution and one that can adapt to varying fraud patterns. In early 2013, we launched the first FICO Retail Banking Payment model on the FICO® Falcon® Fraud Manager 6 platform, a model designed to detect fraud in e-payments (ACH, Swift, BACS, etc). Since then our Retail Banking fraud solution has steadily gained worldwide adoption, with clients in North America, Europe, South Africa, mid-East, and Asia. Our Retail Banking model is empowered with many advanced analytics patented technologies.  As I blogged previously, one distinguishing technology is online self-calibrating models. ... [Read More]

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Risk & Compliance US Credit Quality Rising … The Beat Goes On

US Credit Quality Beat Goes On - blog
Sep132016

When I last blogged about the national distribution of FICO® Scores a year ago, US consumer credit quality was continuing to climb upwards, though with some potential indications of change ahead. At the end of that post, I asked: has the 7+ year upward trend started to level off? 12 months later, the answer is a resounding “no”! The number of consumers scoring in the super-prime range of 800 or above has continued to grow. In October 2015, this figure surpassed 20% of the national population for the first time since we’ve been tracking this metric, dating back to pre-recessionary 2005. In the subsequent six months, the figure continued to climb, reaching 20.4% as of April 2016. Inversely, we see fewer consumers scoring in the lowest score ranges. As of April 2016, just 20.7% of the population score 600 or below. This figure peaked shortly after the Great Recession, at... [Read More]

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Analytics & Optimization Decision Fundamentals: Making Analytics More Accessible

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Sep062016

This blog is the final post in this series covering my FICO World keynote presentation, sharing the five steps organizations can take to improve their operational decision-making. 1. Capturing subject matter expertise 2. Intelligent solution creation 3. Faster insight to execution 4. Building institutional memory 5. Greater analytic accessibility In this blog I’ll cover the topic of greater analytic accessibility––which seems like it should be easy to achieve these days, but it is still elusive. In the age of the customer, Big Data is the key to intimately understanding customers’ desires and translating those desires into products, services and personalized experiences. This kind of differentiation is critical to companies’ achieving a competitive advantage. The challenge of Big Data is extracting meaningful, timely and actionable information from it at a reasonable cost. The complexities of doing so mean that two-thirds of businesses derive little or no tangible benefit from the information they hold. Only 4% of companies extract... [Read More]

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Fraud & Security Video: How SulAmérica Uses Analytics to Stay Ahead of the Game in Insurance

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Sep012016

Ever wonder how SulAmérica combats fraud, waste and abuse? In the video below, Umberto Reis, IT Senior Manager at SulAmérica, notes that of the multi-billion dollar Brazilian health insurance market, roughly 20% may be waste and abuse. Needless to say, it’s a challenging market in which to be profitable. To tackle this complex problem, the insurer uses a combination of FICO analytics and decision management solutions, including FICO® Blaze Advisor® Decision Rules Management System and FICO® Insurance Fraud Manager. This has allowed SulAmérica, the largest independent insurance group in Brazil, to become much more agile and drive continuous improvement. For more information on this success story with SulAmérica, read our blog post: How SulAmerica Fights Insurance Fraud, Waste and Abuse.

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Fraud & Security Securing Digital Payments with Less Friction and Fraud

IPay
Aug302016

At the grocery store the other day, I paid using ApplePay. With just a tap of my iPhone and a chipper (payments humor!) musical chime, my payment was accepted. A few seconds later, after touching a few buttons on the payment terminal screen, I was walking out the door. What just happened? I experienced two things: a frictionless digital payment, and a mild customer experience victory.* Bringing down, or rescuing, the house Best of all, I wasn’t dealing with the “swipe or dip” decision point, and I certainly wasn’t putting myself at risk for knocking out the store’s POS devices. (Check out the blog in the tweet below for another payment expert’s hilarious, deeply personal tangle with EMV.) Based on my newfound confidence from the grocery store, I then marched into the local CVS pharmacy, brandishing my iPhone near the POS terminal only to hear the cashier say, “Oh, are... [Read More]

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Customer Engagement Analytics That Fuel Loyalty – A Client Success Story

Grocery loyalty image
Aug292016

We’ve been blogging about a Canadian grocer that is changing the game with its analytics-driven loyalty program. For its +9 million loyalty members, personalized offers are so relevant, it’s almost like having an old-fashioned relationship with the corner grocer. In this new-fashioned relationship, however, members can redeem their offers at more than a thousand stores of various types, in many locations across Canada. What’s this grocer’s secret to success? Here’s a peek inside the analytics. Understanding customers as more than strings of transactions Delivering a personally unique set of relevant offers every week on such massive scale is a computationally demanding, mathematically intense undertaking. The heavy lifting is performed by over 4,000 time-to-event (TTE) predictive models, generated and updated every four months by a FICO-built analytic “factory.” Each TTE model predicts the propensity of a customer to purchase a particular product — say, a specific brand of laundry detergent —... [Read More]

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