Tag Archives: Optimization

Risk & Compliance Adapting Mortgage Loan Price Optimization to Building Societies

House image with analytics
Apr032017

One of the hottest analytic technologies in mortgage lending is price optimization. This is the application of advanced analytics to pricing strategies, in order to determine the ideal price for every customer that maximizes profitability, given factors such as take-up, affordability, etc. That’s great for banks, but what about building societies and credit unions? If profit isn’t your primary goal — if you exist to serve your members — does price optimization have a place? The answer is definitely yes. Using pricing optimization, building societies and credit unions can develop strategic mortgage offers that target specific objectives, such as customer retention, without hurting the bottom line and ensuring that targets around Treating the Customer Fairly are met. This kind of optimization can really pay off – making an appropriate offer, to the right customer at the right time, typically results in 10-15% higher retention of existing customers. When building societies... [Read More]

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Analytics & Optimization Clean Energy Firm Solves an “Impossible” Problem with FICO Tech

Windfarm Designs logo
Dec132016

Harnessing the potential of wind energy is a challenging problem, from capture through conversion into electrical power. A key facet of wind farm design is how the turbines are placed. A “typical” wind farm project may encompass 200×300 grid points on the wind map to cover 20 turbines; if you consider the number of ways to position these turbines, the placement problem becomes incredibly cumbersome. But it’s not just maximizing energy yield that vexes the human brain. For years, the industry studied the problem of how to factor load constraints into the power optimization mix. Turbine loads (described through IEC standards or load models) have been considered too difficult to include in the optimization problem. Instead, consultants and manufacturers manually review and adjust layouts, which not only takes time – it also generates less than ideal results. Markedslabben AS, a Norwegian wind farm design tool and optimization start-up, cracked the... [Read More]

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Analytics & Optimization Video: Protecting Drivers and Toyota with Optimization

Toyota Optimization Video Image
Aug232016

Ever wonder how Toyota Financial Services keeps 10,000 drivers from hurting their credit? When delinquencies spiked after the 2008 financial crisis, Toyota Financial Services realized it needed a markedly different approach to collections. As Jim Bander of Toyota Financial Services explains in the video below, the company turned to FICO prescriptive analytics and optimization, allowing it to become more flexible and scientific about collections decisions. Now, Toyota Financial Services can reach financially strapped customers sooner and have a conversation that makes a difference. The resulting benefits have been numerous, including helping many customers avoid repossession and stay in their cars, and preventing thousands from reaching a stage of delinquency that would affect their credit. For more information on this success story with Toyota Financial Services, read the following blog posts: Toyota Financial Drives “Data Science for Good” with FICO Analytics Toyota FS Wins InformationWeek “Best in Analytics” Award FICO Optimization Helps Toyota Keep... [Read More]

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Analytics & Optimization Toyota Financial Drives “Data Science for Good” with FICO Analytics

Aug022016

An unabashed data geek, I’m fascinated by every facet of analytics and data science, including the growing movement to apply commercial data science techniques for social good. That’s not normally what people think about when the topic turns to debt collection. But using “data science for good” is exactly what Dr. Jim Bander did at Toyota Financial, implementing FICO Decision Management Suite to optimize the automotive lender’s practices, and keep more drivers in their cars and their credit history clean. “We have two core values here at Toyota: respect for people and continuous improvement,” Bander says. “Going into debt collections is a hard time for a lot of people, but our goal is to respect them throughout the process and to keep them as Toyota and Lexus drivers. We want them coming back as future customers.” Continuously improving decision models Toyota Financial began emphasizing collections after the 2008 financial crisis,... [Read More]

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Analytics & Optimization Four Analytic Breakthroughs That Are Driving Smarter Decisions

Hand holding analytics
May262016

Patents are the currency of innovation, in software or any other industry. At FICO World 2016 in April, I explored how four patents we have recently been granted will enrich FICO’s product portfolio and, in turn, your business. Collaborative Profiling From cybersecurity, to payment card fraud, to marketing, companies want answers to the question, “How do we know when someone’s behavior has changed in a significant way?” And subsequently, “How do we rank those changes to focus on the most important cases?” FICO’s recent patent on Collaborative Profiling and change-point detection provides an efficient new way to answer these questions. By distilling behaviors from a large group down to a few basic “archetypes” of behavior, we can effectively determine which persons have the biggest changes in archetype mixtures. That’s a powerful capability that can also help marketers to better understand changing customer preferences. Structuring IoT Messages For the past few years... [Read More]

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Collections & Recovery Toyota FS Wins InformationWeek “Best in Analytics” Award

Toyota and InformationWeek logos
May092016

“Analytics is all about making decisions. Focus on what decisions you have to make and what actions you have to take rather than starting with data or systems.” That’s what Jim Bander, national manager of decision science at Toyota Financial Services, told InformationWeek. And he knows what he’s talking about — Toyota FS just won the InformationWeek Elite 100 award for Best in Analytics for their work on optimization that keeps customers in their cars. (As someone who owns three Toyota Highlanders, I have a personal stake in this story.) This groundbreaking project received the FICO Decision Management Award for Debt Management last year. We are proud of our part in helping TFS on their Collections Treatment Optimization project, which scored this prestigious award from InformationWeek. The metrics Toyota Financial Services uses to measure success illustrate their commitment to their customers. As the article notes, “In the first year 1,600... [Read More]

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Analytics & Optimization 3 Reasons to Visit INFORMS 2016, April 10-12, in Orlando

Apr072016

The INFORMS conferences continue to unveil game-changing approaches that businesses are using advanced analytics such as optimization to literally transform lives and businesses. For those of you who aren’t familiar, The Institute for Operations Research and the Management Sciences (INFORMS) is the largest society in the world for professionals in the field of operations research (O.R.), management science, and analytics. They hold multiple annual conferences targeting diverse audiences, with the Business Analytics and Operations Research conference – held this year at the Hyatt Regency Grand Cypress in Orlando, Florida, from April 10-12 – focusing on the wide-ranging use cases that demonstrate the breadth of depth of analytic innovation. This year, FICO is thrilled to be an INFORMS Platinum Sponsor, which reflects our organization’s focus on optimization and prescriptive analytics as critical components of an integrated decision management strategy. If you’re already planning to come to INFORMS, here are three good... [Read More]

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Analytics & Optimization Performance Anxiety: Correlating Decisions with KPIs

Apr042016

Let’s face it; not knowing whether or not you’re measuring up to expectations is stressful. To avoid that stress, you need to know what you’re measuring, how to measure it accurately, and what those expectations are. With decision management strategies, as with other aspects of life, a clear understanding of those things can go a long way towards ensuring a satisfactory experience. This brings us to the subject of today’s missive: correlating the decisions provided by your decision service with the KPIs (Key Performance Indicators) they are expected to influence. The challenge with this is that there is often no logically explicit link between the decision data and the data used to measure the KPI. For example, suppose you sell widgets. The goal of selling widgets is to make a profit, so profit is the KPI. Your sales manager believes that you can increase profits by offering various incentives to... [Read More]

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Analytics & Optimization Four Ways We Can Build Trust in Analytics

Hand holding analytics
Feb252016

As analytic advancements reach ever deeper into people’s lives — as every aspect of individuals is analyzed to drive decisions by businesses and other institutions — the need for people to trust analytics and the way organizations use them grows. This issue arose in a recent announcement from the industry analyst firm Gartner.  Gartner ”believes the trust factors influencing the ethical use of analytics are identifiable — transparent, accountable, understandable, mindful, palatable and mutually beneficial” and that “leading data-driven organizations will increasingly recognize the causal relationships between data, analytics, trust and business outcomes.” This made me reflect on some lessons I’ve learned as a data scientist as they relate to the interplay between data, models, trust and results. I will omit here some of the more obvious topics such as model validation and tracking model performance. I find it beneficial to think about analytics as an element of a virtuous... [Read More]

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Customer Engagement I’d Like to Buy the World a Better Decision

Feb042016

Sometimes when I look around, it seems as though all I see are the charred remains of terrible choices—and that’s before I’ve even left my kitchen. In business, it’s now been 30 years, yet Coca-Cola will NEVER live down their decision to launch New Coke. (Just Google “Worst Business Decisions Ever Made” if you don’t believe me.) We don’t even need to leave the soft drink industry to come up with a top 10 list of bad decisions. (Crystal Pepsi, anyone? How about this actual advertisement for 7-Up, which is literally the poster child of bad decisions?) Within the ultra-competitive automotive finance industry, lenders don’t have the benefit of being able to survive small-scale bad decisions, let alone titanic blunders like the ones I listed above. Even a series of “good-but-not-great” decisions is enough to put you out of business, simply due to the volume of rival financers who can... [Read More]

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