Needed: A consumer-led recovery

In his keynote address at FICO World 2011 this morning, FICO CEO Mark Greene laid out an imperative for economic recovery. Banks, he said, need to rebuild the relationship with consumers.

Mark cited the recession of 2008 as the first since World War II that was consumer-triggered, starting with consumer debt problems and mortgage problems, followed by a contraction in spending. “A healthy economy needs a healthy consumer,” Mark said, noting that the consumer-led recession need a consumer-led recovery.

That recovery will have to come from improved relationships between banks and consumers, as this relationship is critical to the health of both and the economy. Mark said that banks are looking for a “new normal” in their relationship with consumers, but haven’t found one yet. “We haven’t reset the rules, to both sides’ satisfaction,” he said. “We have not yet changed the game.”

So what is needed to change the game? Mark said it’s critical that banks do more to truly understand their customers — what they need, what they want, what they expect, what they can afford. At FICO World, the 700 attendees are hearing first-hand from clients about initiatives to improve customer knowledge and restore growth. Many of the topics — such as measuring consumer debt capacity and understanding the economy’s impact on credit risk — will be familiar to readers of this blog. It’s fascinating to hear the stories of their adoption and use in markets worldwide.