Risk & Compliance Reinventing Originations in the Digital Era


In today’s fast-paced, technology-driven society, market incumbents across a variety of industries have had to reinvent themselves in the face of massive digital disruption. Before the iPod, music industry executives couldn’t fathom the idea that consumers might prefer to buy individual songs rather than a whole album. Before Uber or Lyft, taxi company executives couldn’t imagine consumers would be comfortable summoning unlicensed strangers to pick them up in their cars and drive them around. Not every industry experiences these same tectonic shifts and not every company ends up getting run out of business by an Apple or an Uber. However, avoiding this fate requires market incumbents in every industry to consistently and rigorously evaluate the ways in which they are harnessing emerging technologies to meet their customers’ evolving expectations. So where does this consumer experience driven, digital world leave financial institutions?  The answer of course, is “it depends.” For some,... [Read More]

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Risk & Compliance Digitizing Credit Originations at SunTrust

Digitizing Credit Originations

Earlier this year at FICO World 2018, we held a session with SunTrust about how they rebuilt their origination process to become truly customer-centric. SunTrust set about digitizing credit originations to implement an origination system that offered the path of least resistance for customers, and in the process also rebuilt its existing business processes. SunTrust wanted to deliver a significantly simpler and more engaging experience for their customers. The result has been an origination process, infused with automation and self-service communication capabilities, that has enabled the bank to wildly outperform their most optimistic ROI projections. Check out this short video where Angela Baker, senior vice president, business lending & payment solutions group product manager at SunTrust explains why optimization was a priority for the online retailer. Digitizing Credit Originations To Meet Customer Expectations – Transcript:  Angela Baker, senior vice president, SunTrust  What was the challenge facing SunTrust? Sun Trust is located in Atlanta Georgia.... [Read More]

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Customer Engagement Video: TBC Bank Deploys Customer-Centric Originations


Ever wonder how TBC Bank cut credit decision times from one day to fifteen minutes? In the video below, Giorgi Alibegashivili, strategy project manager at TBC Bank, talks about growing competition and the need to respond quickly to market changes, noting: “In today’s digital world, it’s important to be agile.” He explains why the bank turned to FICO® Origination Manager, which supports connected decisions across the entire lending lifecycle for a more holistic view of the customer. In a matter of months after implementation, TBC Bank significantly sped up time to decision, increasing customer satisfaction and driving competitive advantage. For more information, read the TBC Bank case study. And read our blog series on best practices in originations: What Does Best-in-Class Credit Originations Look Like? Are Your Credit Originations Good, Better or Best? Originations Software: Investing for Good Times and Bad

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Customer Engagement What Does Best-in-Class Credit Originations Look Like?

Woman with Predictive Analytics Formulas

In an earlier blog post, I asked whether your credit originations was good, better or best, citing three common scenarios we see in global customer deployments: Good – All geographies standardized on a single solution, with each country or region customizing its own environment. Better – Following the 80-20 rule, each geography or region uses an environment that’s 80% standardized and 20% customizable to local requirements and practices. Best – Standardized credit application and decisioning across all geographies, with certain variables configurable to address market or regulatory conditions specific to each country or region. In this post, I’ll break down exactly what “best” means and share real-world examples of each of these three scenarios. Balancing global management and local flexibility The diagram below illustrates the combination of stability and flexibility that is common in successful originations operations, across industries and around the world. As you can see, the decision structure... [Read More]

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Customer Engagement Are Your Credit Originations Good, Better or Best?


In a prior post, I talked about standardization at Southwest Airlines on a single type of jet and the benefits that provides. There’s a lot of historical precedent for finding value in standardization. Roman soldiers, for example, built their forts using the same design. The benefits of standardization hold true in a very different domain: credit originations. Global organizations that replicate a single core originations environment across businesses and geographies, while allowing for local adjustments on certain variables, extract the most value from their software investment, hands down. What’s worked with our customers FICO has deployed originations solutions at hundreds of companies around the world, and we’ve learned a lot from our customers. Those focused on competitive differentiation fall into three broad categories: Good – All geographies standardized on using a single solution (such as FICO® Origination Manager), with each country or region customizing its own environment. Better – Companies... [Read More]

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Customer Engagement Originations Software: Investing for Good Times and Bad


There is only one economic certainty: in any given region or industry, there will be good times and bad. It’s an obvious statement – but when it comes to finding the “right” time to invest in originations software, it’s hard for large lenders to do so. They are hesitant to invest in new software during down economies, and too busy originating loans when times are booming. Quite often, “right now” is the right time to invest. As the global economic pendulum swings, originations software enables lenders to benefit from efficiencies in lean times and robust throughput when credit appetites return. Originations software as a strategic asset It’s important to take a strategic, long-term view of the software used to originate loans. Beyond its main job, originations software can significantly contribute to business success in additional ways. These include: •   Operational efficiencies. In a down economy, reducing costs becomes critical. Having... [Read More]

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Customer Engagement Agile Originations — Oxymoron No More


“Agile” and “originations” are two words not often used together in the same sentence, except perhaps: “I wish our origination system allowed us to be more agile in adapting to changes in underwriting criteria.” Agility, defined Last year, my colleague David Lightfoot wrote a blog about upgrading origination systems to meet rising customer expectations. That post focused on auto lending, but the same core principal – agility – applies to the broader originations market. Nearly every financial organization in developed markets already benefits from the process automation that modern origination software offers. But automation is not the same as agility. After “Day 1,” when the origination system goes live, the processes that need to be automated don’t change much. But the underwriting criteria on which credit decisions are made do change, on a constant basis. Financial organizations often have had to code laborious workarounds or been hamstrung for weeks trying... [Read More]

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Customer Engagement Originations: Are You Ready to Step onto the Cloud?


Should our company deploy origination software on-premises or in the cloud? We’ve been fielding quite a few questions along these lines after recently launching our own FICO® Origination Manager 4.5, the first release that can be deployed either way. In this post, I’ll answer some of the top questions we’re hearing, including: Why move to the cloud? What are the operational benefits? Will it hinder regulatory compliance? Will our data be secure? What are the financial benefits? The answers below can help you decide whether on-premises or cloud delivery is right for your organization. The basics: Why chose cloud-based software over traditional on-premises? Cloud-based delivery shifts operational responsibility for everything associated with you using the software – software license, implementation, servers, associated data storage, data center space and utilities, security, and more – to the provider. As a result, the cloud offers strong benefits in several areas: Fast time-to-value, sincesoftware can be available in just a few days, with...


Risk & Compliance Zero to Hero: Aiming for Best-in-Class Originations


Emerging markets in Asia are seeing tremendous growth in credit applications at the moment, particularly in countries like the Philippines, Thailand and Indonesia. The Philippines, for instance, has witnessed credit card growth by volume between 10 – 15%, and Asia Pacific is expected to move from the third to second largest of the seven regions by 2016 in terms of card payment volume. Many of our APAC banking clients are looking to automate their originations decisions for the first time, and enhance those decisions with application scores, and bureau data and scores where available. For example, when a bank in the Philippines decided to venture into the consumer banking market by offering auto loans, credit cards, mortgages and personal loans, they knew they would face stiff local competition. Working with FICO, they're determined to build competitive edge through the right analytics, decision management technology and risk strategies. With originations accounting for as much as 40% of total bank costs and up to 80% of the risk, banks in these growth...

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Risk & Compliance Analytics for more profitable originations


One way FICO clients are boosting profits in originations is by using analytics that provide critical insights into a wider range of factors affecting the performance of new accounts. Here are three key areas where we've found analytics can sharpen origination decisions: 1. Macro-economic impacts on credit riskAnalytics can help lenders understand and anticipate the impact of changing macro-economic conditions on the default rates historically associated with credit risk score ranges. By quantifying the relationships between forecasted economic factors, such as GDP, unemployment and housing prices, and expected default rates, they're able to predict the degree and direction (positive or negative) of likely default rate changes at each score range.When such predictions are in the form of consistent metrics that can easily be added to origination strategies, lenders have an empirical means of adjusting score cutoffs. They can increase cutoffs to maintain their current default rate despite an economic downturn. They can also use these predictions to avoid...

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