Enhancing Credit Assessment for Existing Customers LIFECARD, a credit card company with more than 5.7 million accounts, is the first lender in Japan to adopt the FICO® Score to enhance its credit assessment for existing customers. Calculating an appropriate and timely offer for a credit limit increase is made more accurate by reassessing customers with the FICO® Score, which analyzes their credit bureau data from all their credit accounts. LIFECARD is also using the FICO® Score to realize risk and cost reduction by better evaluating credit risk eligibility. Shinichiro Okuyama, executive officer at LIFECARD, said, “Growth in the Japanese banking market continues to be hard-won. A contracting population, ultra-low interest rates, shrinking margins and constrained demand mean that lenders need to find opportunities for innovation. To grow our share-of-wallet we needed a way to differentiate our approach to lending, and offering proactive credit limit increases and personal loan offers to our... [Read More]
Are Premium cards becoming harder to distinguish from Standard Classic cards? Is there still a place for them in the market? Traditionally, Premium* cards (gold and platinum) were perceived as reserved for the lowest-risk, best-quality accounts, and so had higher limits. Spend was thought to be greater, though a larger proportion of full-balance payers made them less profitable than Classic cards. However, over time the FICO Benchmark Reporting Service data for the UK reveals that the Premium customer is changing and so is the performance, particularly of the more mature accounts. In July 2017 25% of the accounts in the FICO Benchmark Reporting Service were Premium accounts, along with 25% of balances. With the exception of New accounts (<12 months on book), which were 20% of accounts and 20.4% of balances, Established (1-5 years on book) and Veteran (5+ years on book) accounts were about 25% of the relevant vintage population in the service. Common Beliefs... [Read More]
Ever wonder how one of Chile’s largest retailers retains over 3 million customers? We asked Scotiabank Cencosud’s Claudia Guerrero, Model Development Manager of Risk Management in its Retail Finance division. In this Cencosud video, Claudia discusses how the retailer relies on a comprehensive, integrated credit portfolio management solution developed by FICO. This enables it to make better customer decisions, from originations through customer management. In particular, FICO® TRIAD® Customer Manager successfully manages risk-based strategies for credit line increases and cross-selling, and FICO® Model Builder has helped Scotiabank Cencosud cut model development times in half, while still retaining predictive strength — which the company sees as a tremendous competitive advantage. For more information, read the Cencosud case study or visit the FICO Model Management and Compliance solution page.
Fees are an important and often misunderstood part of checking accounts. Management of checking account fees is often scrutinized by regulatory agencies and the public. A review of the CFPB’s Complaint Database and the CFPB’s 2015 Consumer Response Annual Report shows the impact of poorly managed fee programs on consumers and the banking industry. How do you know if you are effectively managing fees? Ask yourself these questions: Are your policies easy to understand and consistently implemented by your front-line personnel? Is your fee waiver approach based on relationship and risk, or do you have a one-size-fits all approach to fee waivers and fee reversals? Are your policies easy to understand and consistently implemented? Let’s discuss the “easy to understand” part of this question first. The fee policies in place must be easy to understand for your customers as well as your staff. Your front-line employees should understand the fees that... [Read More]
In my last post, I discussed the eight disciplines critical for companies looking to improve their maturity in managing customer experience. With increased maturity comes a sustainable competitive advantage that is hard to duplicate. But it’s important to note that no company will excel in all eight disciplines, even top performers like Zappos and Disney. To lead in an industry, you only need to mature to a greater degree (and preferably earlier) than your competitors. One thing that can inhibit or promote the speed of a company’s maturity is the path taken. This path determines the disciplines in which they focus their energy, and the priority they put on these disciplines. And, unfortunately, there are no shortcuts. The diagram below is the order prescribed by FICO to optimize a company’s use of time and resources to increase maturity, based what works – and what does not work – with our... [Read More]
Are retail banks overlooking deposit accounts? Many may be missing out on higher profits and improved customer satisfaction because they aren’t taking the right analytic approach to the challenges they face—most notably, a complex regulatory compliance landscape and more competitive market environment. For many institutions, inconsistent fee waiver, or hold policies, are leading to higher customer attrition and missed profits. But with the right analytic tools and approach, these issues can be overcome to make deposit accounts more rewarding. In this video, Bruno Courbage, senior director at FICO, shares five ways that predictive analytics improve the decision-making process to unlock the profitability of your deposit accounts.
Imagine if you had to rate your opinion of Justin Bieber on a scale of 1-10, but your knowledge of him was limited strictly to his album sales. Further, if you tried to do an online search of him, the only information returned to you would be his album sales. According to Billboard, the Biebs’ latest album, Purpose, hit #1 on the charts late last year. Not only that, it was his 6th album to make it to the top of the charts, and it sold the largest weekly unit total for an album since Billboard updated their tracking methodology in 2014. Based on that criteria alone, you’d probably have to give him a 10. Now imagine if the Biebernator showed up on your doorstep with his (possibly fake) eyeglasses, a full turtleneck covering all tattoos, and a totally normal hairstyle, AND he was asking to date your daughter. And... [Read More]
Regardless of industry, every business has to deal with high-risk customers or employees. If you can manage them correctly, the upside is tremendous. If not, they can potentially crater your operation. As a long-suffering Charlotte Hornets basketball fan, I’m all too painfully aware of this phenomenon. Last season, we (I am one of those insufferable fans who refers to his team as “we” as though I’m actually part of the team) took a chance on a high-risk player named Lance Stephenson by signing him to a multiyear contract. Lance (whom I refer to on a first-name basis even though we’ve never met, and I’m pretty sure we never will meet) was one of those guys with a checkered history in terms of on- and off-court performance, but who’d shown enough potential upside that it was worth taking the risk on acquiring him. I’d love to say that the gamble paid... [Read More]
