Tag Archives: Attrition and Retention

Analytics & Optimization How Banks Can Fight Attrition and Improve Risk Predictions

Aug252015

How can banks leverage their transactional and non-traditional data sources to fight attrition and risk prediction? At this week’s Credit Scoring and Credit Control XIV conference, I will be discussing this subject in detail, but I thought I’d give you an overview of my talk. Transactional and non-traditional data sources show a lot of promise for banks. Using transactional analytics, for example, we can build more predictive behavior risk models using combination of Masterfile and transaction data. Such models are also better at predicting risk of default earlier than the traditional models. So banks can achieve the twin benefits of identifying more instances of future bad cases much earlier. Similar benefits accrue in case of attrition detection. Working with transaction data can also eliminate the need for expensive Masterfile data while keeping the performance gains intact. With the advent of Big Data technologies, it has become far easier for banks... [Read More]

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Analytics & Optimization Engaging Fickle Customers and Tackling Silent Attrition

Aug242015

At the Credit Scoring and Credit Control XIV conference August 26-28, I will be discussing innovative analytic techniques and applications revolving around engaging fickle customers and tackling silent attrition.  Here is a preview of my talk: Everyone knows the ideal customer: frequent shopper, highly profitable, engaged, loyal. But in today’s competitive markets the most profitable customers are a fickle species and can turn away (or more likely are lured away) on a dime, possibly without giving prior warnings. “Silent attrition” happens when customers stop transacting without saying “I’m no longer your customer”. It occurs in non-contractual relationships such as in retail and it happens with credit cards when customers stop using a card without canceling it. When silent attrition emerges, businesses have a brief window of opportunity to try to re-engage the customer before the parting becomes cemented. Rapid detection of silent attrition and fast contact through mobile channels provides... [Read More]

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Risk & Compliance FICO® Scores: Just Like Mikey – They Like It!

Aug212014

The following guest post was written by Caitlyn Ramey, Director of Marketing at First Bankcard, a division of First National Bank of Omaha Even if you’re not a child of the 1970’s, you may still remember the Life cereal commercial where Mikey’s siblings get him to try what they deem to be a boring cereal that’s supposed to be good for you (so of course they don’t want to try it). They foist it off on little Mikey and are incredulous when he digs in and Mikey likes it! A kid eating healthy cereal; who would’ve thought?! Well, now we all know what’s good for us, right? Eating fruits and veggies, exercising, getting enough sleep, supportive friendships, etcetera, etcetera. Those of us in the financial services industry would say that your credit health is also very important, but how do you know if your credit is in good shape? It’s... [Read More]

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Customer Engagement Westpac Scores Transaction Data Daily to See Customer Risk More Clearly

Jul102014

Beauty really does lie in the detail. We have all gazed at the splendor a professional high-resolution image and understood, after snapping away for years on a compact camera or phone, that there is richness in more information. Higher resolution means seeing details you haven’t been able to see before. This is exactly what Westpac Banking was aiming for when it looked to FICO to introduce a daily transaction score. Westpac was looking to improve its ‘financial resolution’ by assessing its customer risk and attrition every day, instead of the industry standard of every 30 days. FICO® Transaction Scores are based on a customer’s card usage patterns and updated with every transaction authorization, yielding a more precise and current assessment of customer risk and purchase behavior that can be used to target cardholder decisions. The impact of this predictive analytics project for Australia’s second-biggest bank has been far-reaching. Paul Deall,... [Read More]

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Customer Engagement Join Us For FICO World 2014

May212014

Attracting, serving and protecting customers is getting tougher, so how are companies using predictive analytics to out-maneuver competitors and win customer loyalty? Join us at FICO World 2014 to discover answers from experts and network with your peers. Registration is now open for the conference, which will be held November 11-14 in San Diego, California.

FICO World has become the leading global conference on analytics-powered customer engagement strategies. This year’s theme, “The New Customer Imperative,” stems from the convergence of social, mobile and cloud, which is evolving customer behaviors and expectations, revolutionizing business and society, disrupting old business models, and creating new leaders. We’ll explore this theme through a number of sessions, speakers and events, including:

100+ presentations on analytic innovation, credit scoring, customer growth and retention, customer originations, debt management, fraud and security, mortgage lending, regulatory compliance, and small business lending.

Keynote presenters Theresa Payton,...

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Fraud & Security “Knowing Me, Knowing You” — Catchy Tune, Critical Tactic

Apr242014

“Knowing me, knowing you, ah ha!”  In the eternal words of Abba (to say nothing of Alan Partridge), knowing people is important. Knowing people’s behaviour patterns certainly is at the heart of risk management, fraud and collections strategies. Homogenous or one-size-fits-all strategies just don’t work as well. So why should customer communication be any different? Automated communication and case resolution is becoming a necessity for all institutions with fraud verification or collections needs. With the emergence of mobile devices and electronic communication channels, institutions can engage with their customers using multiple media channels, in intelligent automated dialogs. Customer response to automated resolution of fraud and collections events has been overwhelming, and has transformed the operating models of many financial institutions. But we often find that dynamic and tailored communication strategies are overlooked in favor of a one-size-fits-all strategy. Recent FICO analysis has shown that even something as simple as customer age...

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Customer Engagement Getting the Elephant to Dance: Better Modeling for Big Data

Mar172014

  Banks and other financial institutions (FIs) have always had Big Data. But now, with improved data modeling and closed-loop analytics, FIs can finally get closer to the real-time decision support models that other types of industries already enjoy. Business analysts can create and deploy new decision models to manage portfolios of credit card and loan products in just weeks, not months or a year. In other words, this powerful, but cautious, elephant is starting to dance. Kudos for the elephant For decades, FICO has helped banks build and implement decision models to manage their businesses. A recent article in McKinsey Quarterly, “The benefits—and limits—of decision models,” highlights what we have seen for years: Examples of successful decision models are numerous and growing… Banks approve loans and insurance companies extend coverage, basing their decisions on models that are continually updated, factoring in the most information to make the best decisions. Some recent applications are truly dazzling. Certain companies analyze masses of...

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Risk & Compliance Is Conduct Risk Just a UK Worry?

Feb102014

Transparency, sustainability, governance, good practices, clear selling process…. All these buzzwords sound familiar, right?  They seem to apply in every banking market. Here’s one that doesn’t: conduct risk. You can read about conduct risk nearly every day in the UK, where many of the top banks have been tarnished for PPI misselling, LIBOR fixing and other bad practices. This has led the Financial Conduct Authority to tackle conduct risk head on. Given the problems banks are facing in other markets, you’d think conduct risk would be a universal focus. But it isn’t. Outside the UK, the term is rare, and fewer banks are focused on creating a systematic way to prevent the kind of fraud, waste and abuse that leads to catastrophic fines, losses, lawsuits and reputational damage. This has to change. To provide excellent service and a fantastic customer experience, all financial institutions must manage their conduct to reduce or mitigate the risk of errors and mistakes.  A proper risk assessment is a good way to start. Then, once the areas or...

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Risk & Compliance FICO Data: More UK Cards Are Gathering Dust

Jan282014

Everyone knows the UK economy is recovering, and retailers had a good Christmas. This upturn is coming none too soon, as our review of more than 38 million UK credit cards shows that the percentage of UK card accounts that are active has dropped from November 2012 to November 2013. Our Global Business Consulting team looked at the percentage of accounts which are active (have a balance), and then further broke that down by vintage: New (0 to 12 months on books), Established (1 to 5 years) and Veteran (5+ years). Key findings: Active rates overall dropped more than 10% to 47% since November 2013.  The older the account, the greater likelihood of it going inactive. The sharpest fall was for veteran accounts, which fell from 50% active in November 2012 to 43% in November 2013. Only New accounts have seen an increase, rising by nearly 8% to 72%. This could be due to the increase in 0% or low-rate balance transfer offers.  One takeaway might be that issuers should focus on New accounts, but it is more expensive to add new accounts than to...

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Risk & Compliance Do Consumers Actually Care About Their Credit Scores?

Jan062014

The following guest post was written by Caitlyn Ramey, Director of Marketing at First Bankcard, a division of First National Bank of Omaha If anyone asked us whether consumers care about their credit scores, we at First Bankcard would say, “OF COURSE, they should care!” How else can they qualify for our company’s incredible financial products without understanding their FICO® Score and what they can do to improve it? As I thought about this, however, it occurred to me that we might be a touch biased on that topic. So back in early 2013, when First Bankcard began to work with FICO to proactively provide our credit cardholders with their FICO® Scores through the FICO® Score Open Access program, we decided to actually ask our customers what they think. We emailed a random sample of our credit cardholders a brief survey asking a few simple questions regarding their credit score. We asked whether or not they knew their credit score, how long it had been since they’d seen the score, if they would find value in getting their score for free each month and if...

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