Care by Volvo Approves Applications in Seconds
New vehicle subscription service uses cloud-hosted FICO platform to accelerate customer onboarding
From Three Days To Just Seconds
Volvo Cars has used the cloud-hosted FICO® Platform to digitize and accelerate the customer onboarding process for its new vehicle subscription service, Care by Volvo. By automating the process, Volvo has cut the credit check process on applicants from three days down to seconds.
Care by Volvo is a vehicle subscription service (Mobility-as-a-Service) designed to let customers enjoy the benefits of a new Volvo, without the challenges of owning one. For a fixed monthly fee, Volvo provides subscribers with a brand-new Volvo and covers all regular service, maintenance costs and breakdown cover. The service was introduced to reflect the shift in consumer preference toward car usage and away from absolute ownership.
You can read more about this story in the full media release.
“When we piloted Care by Volvo in Germany, we used manual credit reference checks, but this took too long and wouldn’t scale as we rolled the program out across Europe and North America,” said Fredrik Nero, product owner at Volvo Cars. “We needed to process applications faster, and approve applications in real time, in line with the Care by Volvo digital vision. Moving to FICO and its cloud-hosted digital decisioning solution gave us the speed and consistency we needed to improve the service and roll it out.”
Volvo adopted various components of the FICO Platform — FICO® Decision Modeler, FICO® Application Studio, FICO® Data Orchestrator Data Acquisition Module — in a cloud-hosted version for maximum efficiency. The solution connects to various external data providers, provides a workflow for managing referred decisions and is integrated with the digital sales channel. It is used for both consumer and business subscribers.
“We now have a single framework to handle third-party data consistently across countries,” said Nero. “This has allowed us to manage our credit policy with a single underwriting team, and yet allow for local market risk needs.”
Care by Volvo achieved its goal of real-time decisions for more than 80 percent of applications, with straight-through processing. As a bonus, the FICO-powered solution is being extended beyond Care by Volvo to all digital sales and new battery electric vehicles as the Volvo Digital journey progresses.
For its achievements, Volvo won a 2021 FICO® Decisions Award for cloud deployment.
Volvo Cars is shaping the future of driving and making it possible for more people to get behind the wheel of a Volvo. A single, cloud-hosted platform from FICO is just part of this amazing success story. Congratulations to the Volvo team for their innovation.
“Harmonization is very difficult as you move to the cloud, and you start to look at the different data streams,” said David Dittmann, vice president, Data & Analytics, P&G and one of the FICO Decisions Awards judges. “Volvo was able to take a manual, fragmented business process, and then centralize it and automate it in real time to make it talk to their backroom applications to make credit decisions. The judges thought Volvo did a great job deploying this system in the cloud across multiple countries.”
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FICO® Score High Achievers: Is Age the Only Factor?
<p>FICO’s latest research on <a href="http://www.fico.com/en/blogs/risk-compliance/us-credit-quality-rising-the-beat-goes-on/" target="_blank">national FICO® Score distribution</a> shows that US credit quality continues to trend upwards, with an increasing number of consumers scoring in the highest scores ranges. Given that, we decided it was time to refresh our study on “<a href="http://www.fico.com/en/blogs/risk-compliance/infographic-what-does-a-high-credit-scorer-look-like/" target="_blank">FICO® Score high achievers</a>,” where we examine the credit behavioural profiles of consumers with higher credit scores.</p> <p>As expected, our latest study showed that older people generally have higher scores, as has been the case in our <a href="http://www.fico.com/en/blogs/risk-compliance/age-before-beauty-credit-worthiness-before-youth/" target="_blank">past research</a>. This is largely because they have trade lines that have been open longer, which leads to higher scores (assuming the trade lines are in good standing and all other things equal). The most credit savvy among you will remember that length of credit history accounts for roughly 15% of the overall <a href="http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx" target="_blank">FICO® Score calculation</a>.</p> <p>But for younger consumers, it isn’t too helpful to say, “just wait until you are 50 years old, and that will fix things!” Thus, I decided to dive deeper with our analysis, including looking at the credit behavioural characteristics of younger consumers with high FICO® Scores.</p> <p>In this analysis, I looked at credit characteristics for the two highest score bands, 750-799 and 800-850, which have about 16% and 23% of the population, respectively. I further broke this down by looking at the characteristics of the youngest 15% in each group, which occurs at age 29 for the 750-799 group and 43 for the 800-850. We used FICO<strong>®</strong> Score 9 for our analysis, and examined typical variables of the categories that go into the make-up of the score.</p> <p><a href="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png"><img class="alignnone size-full wp-image-29367" src="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png" alt="fico-score-high-achiever-table" width="715" height="747" /></a></p> <p>Since there’s a lot to dissect in this chart, I’ll highlight a few findings that struck me: <ul> <li><strong>Credit history.</strong> Higher scores are undoubtedly associated with a longer time on file. What’s striking is the higher average time on file for the 800+ group, both overall and for revolving accounts (the most common trade line). Clearly, it helps to start credit use early in life – but that’s not the sole determining factor for high scoring. The younger cohorts in both the 800+ and 750-799 groups have time on file medians significantly less than their older counterparts.</li> <li><strong>New credit.</strong> High credit scorers do, in fact, pursue new credit. We see little variation in months since last trade line opening and last inquiry among all groups observed.</li> <li><strong>Pay on time.</strong> As you might expect, the further in the past the delinquency, the higher the score – and that’s <u>if</u> a delinquency ever happened. 95% of the 800+ people and 72% of the 750-799 group have never been delinquent, which is a striking contrast to the 57% for the total population. The percentages for the younger groups are even higher, especially so for the 750-799ers. Collection items are also scarce for these high scorers. While 23% of the national population have collection items greater than $99, the figures are only 0.5% for the 800+ group and 3% for the 750-799 group. It is clear that, in conjunction with starting a credit file early, paying on time is a key trait of the FICO® Score high achiever.</li> <li><strong>Balance and utilization.</strong> Finally, we look at how credit is being used, focusing on revolving product use. (Since most people only have one mortgage or one auto loan, variation in instalment product figures is minimal and driven by payment history, which is near perfect for high scorers, as we’ve seen.) FICO® Score high achievers tend to have more open revolving accounts. While the % active trades and utilization are generally lower, by no means do high scorers avoid the use of credit products. What drives the difference here is the amount of <u>available</u> revolving credit utilized. The 800+ group is roughly 1/4 of the national median, both in total and on their highest utilized card; they also have lower balances and more cards<em>. </em>The 750-799 group is more active and higher utilized, but still only at 2/3 of the national figures. The young 750-799 group compensate with lower revolving balances and, as a result, lower utilization, which is in line with what we see for the 800+ group.</li> <li><strong>Benchmarks.</strong> I’d like to point out that while this study provides good benchmarks of the typical credit traits of the FICO® Score high achiever, individual credit profiles will vary widely. And keep in mind that when we sort groups of consumers as a whole by different behaviours, some results may look superficially odd. For example, the 800+ band has a longer median average open account time (128 months) than average revolving months on file (140 months).</li> </ul> So, what do we conclude? A huge takeaway is that high scorers don’t have too much in the way of serious delinquencies and negative public record data.</p> <p>In most respects, the young 800+ people are like their peer group. They really only differ markedly in their shorter credit history and higher non-mortgage balance, both of which are a function of life stage. Our results show that you don’t have to be a credit product hermit; these high scorers have more credit cards. The takeaway is to start credit activity early and maintain well-managed and moderate usage.</p> <p>In many ways, the young 750-799 people are more interesting because their age profile is much younger. Their credit characteristics differ more from their peer group, particularly in terms of length of credit history. They compensate by having almost pristine credit records and lower balances.</p> <p>Ultimately, 39% of US consumers are FICO® Score high achievers, which they accomplish by following common-sense credit practices. It ain’t rocket science!</p>
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