When it comes to collections and analytics, there are a lot of funny ideas out there. See if any of these ring a bell: If I’m using a score to make decisions, it’s good enough on its own. If I apply more resources to a case, I’ll collect more. Analytics are too expensive, and I don’t get a return on my investment. Sound familiar? At FICO, we have heard these statements again and again from collectors. Watch my new video to hear me discuss the facts and myths behind these popular misconceptions about collections. FICO Spotlight: Collections & Recovery Myths from FICO™ Decisions
How do you balance the need to collect more with the changes in regulations? In this brief FICO Spotlight video, I discuss how rising consumer debt is creating challenges that FICO can help clients meet, with a portfolio of solution that integrates analytics, operations and communications. FICO Spotlight: Compliant Collections from FICO™ Decisions To learn more, visit the debt management section of our website.
With the challenges in the debt management space these days, it sometimes seems like you need superpowers to succeed. But before you start looking for a radioactive spider or a handy gamma-ray machine, check out FICO’s tongue-in-cheek new infographic, The Customer-Centric Collector Rises. (Yes, I realize I just mixed my Marvel and DC metaphors, comics fans.) The superpower we’re talking about is the ability to understand how to motivate a customer to pay, using the right message and the right channel. Rather than brute force, the customer-centric collector uses their understanding of the customer to get great results. This ability comes just in time, as overdue debt grows, traditional tactics falter, customers complain and regulators turn up the heat. As our infographic notes, some 35 percent of US adults with a credit file have debt in collections. About 20 percent of delinquent debt is collected, down from 30 percent a... [Read More]
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...
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...
As 2014 gets underway, consumers are feeling optimistic. Their confidence is on the rebound, a sentiment that is manifesting itself in numerous ways. One of the most noticeable is a rise in automobile sales, which saw an 8% increase, year-over-year, in 2013.
As consumers “re-start their engines” and rev up purchasing in 2014, are banks and other loan originators ready to meet their needs?
Consumer expectations: Right here, right now
Let’s think about the environment in which consumers operate now. They can instantly shop for the lowest price for anything with their mobile phones – and when they find the right deal, they can make a purchase in the moment, too. Everyone is now a comparison shopper, and these shoppers are looking for instant gratification.
The same applies to credit products, such as credit cards, car loans, personal loans and mortgages. According to a recent customer survey by Bain & Company, only 50% of US consumers’ new product business was won by their primary bank, which compares to 63% on average for developed markets....
Banking customer loyalty appears to be on the decline. The Ernst & Young 2012 Global Banking Survey found that the proportion of customers planning to change banks had grown by 70% in just one year, and more customers than ever had accounts with multiple banks. And the company’s 2013-14 Global Banking Outlook indicates that these trends are persisting.
Why then, at the very moment when customer loyalty is fading fast, are some banks setting out to build their futures around it?
In some cases, senior management is convinced that customer loyalty can not only be re-ignited, but is central to driving growth, profitability and return on risk-weighted assets (RoRWA). One reason is that Big Data analytics, decision management technology and intelligent omni-channel communications are creating new opportunities to serve customers in relevant, innovative ways. Another is that even in the limited areas where banks have implemented a customer-centric approach, performance improvements are impressive. And this approach is not only the smart thing to do; it’s the...
As regulation and consumer habits change, banking profits from traditional
sources are getting squeezed. Banks are looking for new strategies to help them
build profitable new revenue streams. One of the more successful approaches we’ve
seen from banks worldwide is that of customer centricity.
There's an interesting example from the technology industry
that highlights how having a customer-centric strategy can play out to success—and
conversely, how the lack of one can lead to decline. Back in the 1990s,
Microsoft changed the game in office productivity by launching Microsoft
Office. By viewing the customer's entire set of needs, they could offer a
tightly integrated office suite and operating system. As a result, they crushed
the individual product powerhouses of the time, WordPerfect and Lotus 1-2-3.
Today, Google embraces the consumer desire to conveniently access core services
(e-mail, contacts, calendar, map locations, etc.), linking them together to
provide a unified customer view—for instance: A reminder about my upcoming
flight...
