Tag Archives: Retail Banking

Risk & Compliance Real or a Red Herring? What Should Banks think of the Fintech Threat?


By now, you likely know the talking points by heart… Silicon Valley is coming Millennials hate banks, so much so that a majority would rather visit the dentist than listen to what banks are saying New fintech products—across a wide range of areas including lending, wealth management, and payments—are going to lead to the unbundling of the financial services industry These talking points are deeply embedded in your brain because they are literally inescapable. If you have attended an industry conference, picked up a trade publication, or followed the conversation of the fintech intelligentsia on Twitter, you’ve been exposed to it. It can be difficult to separate the facts from the hype. However, it is vital that we do so. The question of whether fintech poses a significant competitive threat to financial institutions’ customer relationships, especially with Millennials (consumers age 22-37) and Gen Z (consumers age 18-21), has enormous implications... [Read More]

Leave a comment

Fraud & Security 4 Payments Predictions for 2017 – Mobile, Fintechs and EMV (Still)

Psychic office

It’s predictions time again. And while I was correct that 2016 did turn out to be the year of bad analytics—see the ultimate illustration below—this year I’m doing something different: I’m predicting what won’t happen in the coming 12 months. The past year perhaps held no analytic surprise greater than the 2016 US Presidential election. Source: New York Times Let us move on to 2017. 1. Prediction: There will be no clear winner in the mobile payments wars A plethora of payment apps emerged in 2016, further upping the already densely populated payments landscape. Launches included Wal-Mart Pay, CVS Pay, Kohl’s Pay and CakePay (my personal favorite), to name just a very few. These apps are follow-ons to Apple Pay, and while many of them aren’t quite as good, that hasn’t stopped the stream of new entrants. Despite consumer confusion and high levels of market fragmentation, the payments landscape is going... [Read More]

Leave a comment

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


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]

Leave a comment

Customer Engagement QUIZ: How High is Your Millennial Banking IQ?

Millennial Quiz

The summer is almost upon us and students are cramming for final exams. Here at FICO, we thought we’d get into test taking spirit with a little quiz for our retail banking customers on one key demographic – Millennials. How much do you know about what Millennials want from their bank? Take our Millennial Banking Quiz to find out. The quiz is based on the results from a recent FICO survey of US consumers about their banking habits. We found some surprising results on what Millennials want. After you take the quiz, you can access the full report to gain new insights around the Millennial generation and retail banking. Click on this link to start the quiz: http://www.fico.com/millennial-quiz/

Leave a comment

Customer Engagement To Fee or Not to Fee: The Millennial Question


Shakespeare’s Hamlet sets the stage for an important discussion around the millennial generation’s views on traditional banking fees. A few months ago I posted about millennial bank switching behavior and the role of fees. Here are a few of those key insights fees and switching behavior: Millennials are 5x more likely to close all accounts with their primary bank, compared with consumers age 50+. One-third of the millennials surveyed cited excessive service fees (real or perceived) as the single main reason they switched banks. This was closely followed by a negative experience with a bank representative and ATM-related issues (too few, inconveniently located, or fees too high). More recently, FICO also spoke to a number of Millennials about fees and here is a sample of what they had to say. So the question is, to fee or not to fee? Which customers does it make sense to waive fees for –... [Read More]

Leave a comment

Customer Engagement The Customer Impact of Fraud: Make or Break for Banks

Worried debtor

With all the news about credit card breaches at major US retailers, one might assume that a huge percentage of the population is dealing with fraud on their credit and debit cards. Interestingly, FICO recently did a consumer research study and we found that only 15% of those surveyed had experienced any sort of fraud (credit, debit, checking) in the past 12 months. That is good news, those numbers aren’t higher, but for those that did it was really a make or break moment for their relationship with that card issuer or bank. The good news is that 79% were very satisfied with the response from their bank and often their opinion of the bank improved based on how well the incident was handled. The really fascinating information came once we asked them what specific actions they took in response to the fraud experience, many closed the account associated with... [Read More]

Leave a comment

Customer Engagement Alternative Lending Becomes Traditional


I was in an elevator the other day and heard the “soft rock” version of Nirvana’s Smells Like Teen Spirit. As shocking as that was, it got me thinking a bit about how over time “alternative” things go mainstream. In the banking context, peer-to-peer lenders are still “alternative” and they still represent a very small part of the overall lending pie, but with the recent news that Union Bank is going to front end part of their lending with Lending Club one starts to wonder how mainstream these lenders are getting. With advances in technology and the ability mine new data sources for insights on risk and customer behavior these firms can move quickly. One of the big wild cards for these lenders is where worldwide regulators are going. In our recent research, we see peer-to-peer lenders are most attractive to the Millennials (18-34 years old) with a little over... [Read More]

1 Comment

Customer Engagement Mind the (Generation) Gap: Millennials and Venmo


Venmo, Venmo, Venmo?  Sounds like a Latin proverb doesn’t it, but if your ears didn’t perk up right away at the name of this break-away payment startup, then pay attention. Venmo is a hybrid that combines a smartphone payment app with a social network and has become one of the Millennial generations go-to apps. According to Business Week, Venmo’s on fire: in the third quarter of 2014, Venmo said it processed $700 million in payments, up from $141 million year-over-year. That is still just a fraction of the ~$5T US payments card market in 2013 (Nilson Report), but the growth is staggering. Payments, social networks and emoji Venmo allows users to send payments to each other with their smartphones, a capability that is extremely popular with rent sharing, tab-splitting twenty-somethings. Reimbursing a friend no longer involves cash –– since 25% of millennials have less than $5 cash on them seven days a... [Read More]

Leave a comment

Fraud & Security Three Opportunities Among Fraud Threats

Beseiged businessman

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]

Leave a comment

Fraud & Security Consumer Tech – Friend AND Foe in the Fight Against Fraud

Fraud graphic

European card fraud losses in a post-mature chip and PIN environment reached a new high last year. With this sobering fact as backdrop, several of the EMEA banking industry’s top fraud and risk management leaders converged in London last week at the EMEA Fraud Forum, hosted by FICO. Following presentations by Andrew Churchill, advisor on cyber security issues to both UK and EU government, and Andras Cser, principal analyst at Forrester, the discussions focused on remote channel payment and associated on-line security, plus emerging best practices for keeping customers safe while improving customer engagement and service. One interesting observation: Fraud is, paradoxically, helping banks regain consumers’ trust. Many customers see their banks as being more proactive in the acquisition, use and interpretation of their credentials, and characteristics. They believe, and expect, that banks are at the forefront of protecting and preserving their personal and payment data. But there were some... [Read More]

Leave a comment