Tag Archives: Account Management

Risk & Compliance FICO Data: Have Premium Cards Lost Their Edge in the UK?

Gold card

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]

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Risk & Compliance Video: Scotiabank Cencosud Cuts Model Development Times by +50%

Cencosud video interview image

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.

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Customer Engagement Getting Checking Fee Management Right


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]

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Customer Engagement Are You on the Right Path to Customer Experience Maturity?


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]

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Customer Engagement Video: Unlocking Deposit Account Profitability

Video - deposit account profitability

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.

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Customer Engagement Fooled by Limited Customer Views? Never Say Never


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]

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Customer Engagement The High-Risk Game of Spotting High-Risk Customers

Basketball + High-Risk Customers

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]

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Customer Engagement Video: 20-25% Reduction in Auto Lender Delinquencies…Yes Please


Over the past two years, the total open balances of outstanding automotive loans has grown from $784B to $968B, up nearly 25% between Q3 2013 and Q3 2015 (source: Experian-Oliver Wyman Market Intelligence Reports). Couple that with the fact that the average term of the loans, the average amount financed and the average monthly payment are all increasing year over year, and it appears the auto lending market is heating up. There’s an unfortunate flip side to that coin: delinquencies. We’ve seen that using analytics to target potentially delinquent customers before they get into trouble is a good way to keep customers on track. Analytics can also help companies appropriately assign collection treatments to reduce losses and keep operational costs down. In this video, Tom Dehler, customer management segment leader at FICO, discusses how auto lenders can get 20-25% reductions in delinquencies.

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Risk & Compliance HELOC Resets: Here We Go Again?


In my last post, I shared new FICO research on home equity line of credit (HELOC) resets. The good news: after examining credit performance of HELOCs older than 10 years, we found little evidence that HELOC bad rates increase dramatically after their reset dates. However, our research uncovered a potential new concern: with the US housing market recovering, consumer appetite for HELOCs appears to be increasing again. Consider the current balances of HELOCs by the year booked: As house prices fell during the Great Recession, significantly fewer HELOC loans were booked. However, as house prices recover, consumers are once again taking advantage of these loans in large numbers, as shown by the increase in the blue line in the graphic above. In the past year, we find balances on HELOCs similar to what was booked in 2003. While recent HELOC growth is slightly less pronounced compared to the years prior... [Read More]

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