Tag Archives: Analytic Best Practices

Analytics & Optimization Modelling Deposit Price Elasticity: Challenges and Approach

Analytics on screen
Sep042017

This is the third in a series of blogs on deposit pricing, focusing on price elasticity modelling approaches and challenges. The goal of any deposit price optimization solution is to make data-driven pricing decisions to manage portfolio balances and trade these off against the associated costs. These solutions should allow a pricing manager to prepare and run what-if analyses to assess the impact of pricing strategies, competitor price actions or movements in central bank base rates. Fundamental to these solutions are price-elasticity models that capture and predict customer behavior as a response to pricing and other non-price factors. In this blog, we discuss the challenges and solution approaches for the development of robust price-elasticity models. Price Response Signal Price sensitivity can be measured with regards to product rate, market ranking, competitor rates or even interest paid to other products in the portfolio. The modelling challenge is not only to measure... [Read More]

Leave a comment

Analytics & Optimization Modeling Deposit Price Elasticity: What Is It All About?

Chart showing components of FICO deposit price optimization solution
Jul312017

Many top financial institutions have begun using predictive modelling and optimization to improve deposit pricing. This requires an understanding of customers’ deposit price elasticity — how sensitive are they to pricing changes, and what is the relationship between price and demand at the customer, segment and portfolio level? I’m going to explore this topic in a series of posts, which should be useful both to deposit portfolio managers and analytics teams. To start with, let’s look at the basics. Price elasticity is the study of responsiveness, and how the demand of a product changes with respect to price (and/or the price of competitors). Understanding deposit price elasticity, or having models that predict this, means you can quantify: Impact of a product’s price change on the deposit product How competitor price changes impact a deposit portfolio Impact of changing macro-economic conditions, such as a change in central bank lending rate How... [Read More]

Leave a comment

Risk & Compliance Video: Scotiabank Cencosud Cuts Model Development Times by +50%

Cencosud video interview image
Apr192017

Ever wonder how one of Chile’s largest retailers retains over 3 million customers? We asked Scotiabank Cencosud’s Claudia Guerrero, Model Development Manager of Risk Management in its Retail Finance division. In this Cencosud video, Claudia discusses how the retailer relies on a comprehensive, integrated credit portfolio management solution developed by FICO. This enables it to make better customer decisions, from originations through customer management. In particular, FICO® TRIAD® Customer Manager successfully manages risk-based strategies for credit line increases and cross-selling, and FICO® Model Builder has helped Scotiabank Cencosud cut model development times in half, while still retaining predictive strength — which the company sees as a tremendous competitive advantage. For more information, read the Cencosud case study or visit the FICO Model Management and Compliance solution page.

Leave a comment

Analytics & Optimization Is Your Analytics Supply Chain Broken?

Simplified view of an analytics supply chain
Feb202017

This is a guest post from Thomas H. Davenport and FICO’s Zahir Balaporia. A version of this post was also published on Data Informed. Businesses across many industries spend millions of dollars employing advanced analytics to manage and improve their supply chains. Businesses look to analytics to help with sourcing raw materials more efficiently, improving manufacturing productivity, optimizing inventory, minimizing distribution cost, and other related objectives. But the results can be less than satisfactory. It often takes too long to source the data, build the models and deliver the analytics based solutions to the multitude of decision makers in an organization. Sometimes key steps in the process are omitted completely. In other words, the solution for improving the supply chain –  advanced analytics – suffers from the same problems that it aims to solve. Therefore, reducing inefficiencies in the analytics supply chain should be a critical component of any analytics initiative... [Read More]

Leave a comment

Risk & Compliance Can the Internet Revolutionize the Finance Industry in China?

Dec232016

This was the question FICO’s Dr. Andrew Jennings was challenged to answer as a guest speaker on a PBOC sponsored panel at The Third World Internet Conference in China. While one would assume the answer is ‘yes’, the world of FinTechs, P2P lending and online financial services have suffered quite a few stops and starts in China. Investment bubbles driven by consumers seeking higher returns, embryonic regulation and a patchwork of lackluster risk management practices persist in a nation undergoing a massive program of urbanization. Jennings spoke about the dual problems of reckless lending and the challenge of improving financial inclusion in China. He proposed that both can be solved with clever, analytically driven credit assessments that use new sources of data. “When we look at the data in China, there is not a single data source that can provide us with a predictable credit score for everyone. So the... [Read More]

Leave a comment

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

Infosistema_insurance_Strategy-Director-featured-image
Oct112016

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]

Leave a comment

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

channelnews-asia-video-online-gaming-money-laundering
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.

Leave a comment

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

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.

Leave a comment

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]

Leave a comment

Customer Engagement Case Study Spotlight: Thinking Differently About Loyalty

Grocery loyalty image
Aug252016

Retail loyalty programs are ubiquitous and predictable — except in the Canadian grocery space. Here, a large retailer is changing the game, transforming what customers expect from loyalty programs and what retailers can accomplish with them. In 2013, when a major Canadian grocer was preparing to launch its first loyalty program, millions of Canadians already had loyalty cards from other grocers — yet grocery sales dropped 0.4% industry-wide. Clearly, there had to be a better way than the largely indistinguishable approach taken by competitors. The grocer decided to take a different path, turning to FICO for advanced analytics to fuel its loyalty program. Predictive and prescriptive analytics determine how to make the best use of available marketing funds. Instead of indiscriminately dispensing points for every dollar spent, the program gives offers and rewards to customers based on a multidimensional understanding of individual shopping behavior. Instead of cross-selling aimed at loading... [Read More]

Leave a comment