BEIJING — January 29, 2015 — FICO (NYSE:FICO), the predictive analytics and decision management software company, today announced that it will release FICO® Alternate Lending Platform for China’s skyrocketing P2P (peer-to-peer) and micro-loan industry. The platform will allow peer-to-peer (P2P) operators and micro credit businesses to improve their profits, reduce time-to-value and implement effective risk management at affordable costs.
“In China, there is a clear difference between the established lenders that use sound risk management technology, and alternative lenders who are still looking for the right solution to create a sustainable business,” said John Chen, managing director, FICO China. “We have closely observed the developments in this fast moving market over the last year. The result is a solution built on advanced analytics that is easy-to-use, yet powerful in delivering a profitable lending business model.”
“More credit is finding its way into the Chinese economy from outside of the banking system than is actually flowing through the banks and as shadow banking social financing is predicted to grow to an estimated 35% of GDP in 2015, according to an International Monetary Fund report,” said Robert Duque-Ribeiro VP/GM of Fair Isaac Advisors, FICO’s consultancy arm. ” Shadow banking has been a boon for investors looking for a higher return on their deposits, and it creates a large credit base to stimulate the economy; However, with lending migrating out of the banking system, the downside is that the level of risk has increased due to a thin regulatory framework.”
In China, the “alternative” lending market has become a flourishing part of the shadow banking industry in recent years. At the end of 2014, more than 1,500 P2P websites were operating; almost double the number in 2013. The value of transactions for the year was more than 250 billion yuan, nearly 2.4 times of that in 2013. On the flip side, a lack of scientific risk management, appropriate government regulation and poor operations has resulted in 275 P2P operators going bankrupt in 2014 or suffering serious problems. This is 3.6 times the number in 2013, according to the China Internet Finance Annual Report published this month by Wangdaizhijia.
In response to market demand, the company has created its FICO® Alternate Lending Platform to allow micro-lenders to use a risk scoring and decision making system, specifically tailored to their unique originations process. This SaaS solution includes FICO’s industry-leading credit scoring services, a FICO cloud decisioning platform and business strategy consulting, allowing lenders to make smarter business decisions.
“In China, ’gut-feel’ origination practices that fail to adopt qualitative and quantitative analytics have been common,” continued Duque-Ribeiro. “We took our global experience in scoring best-practices and overlaid our local knowledge. This involved developing risk scoring models and credit policy rules using our experience in micro-lending to create a more accurate assessment of the risk and therefore profitability of the loan applications.”
FICO’s cloud-based platform has also been designed to be very cost-effective, by eliminating costly installations and updates. The solution offers the ability to incorporate customized rules to ensure the fastest possible time to value for FICO clients. FICO® Alternate Lending Platform can help small lenders significantly improve the quality of their underwriting decisions, drive profitable growth and expand their business while creating efficiency and speed in their credit origination workflow.
“2015 is a critical year for China’s finance industry reform,” said Li-May Chew, Associate Research Director, Financial Services Advisory, IDC Financial Insights Asia/Pacific, “The regulator’s open and tolerant attitude towards internet finance has sped up the P2P development in China in past two years. This year will see more regulation on the industry and the risk management requirements will be raised. “FICO is well recognized as the global leader in risk management and its offering to the market is very timely.”
More than 500 of the world's leading banks, financial institutions, equipment manufacturers and retailers use FICO originations solutions, as do thousands of smaller institutions. These organizations often see a 50 to 100 percent increase in application volume capacity, a 25 to 50 percent reduction in manual reviews and a 15 to 25 percent reduction in delinquencies and bad debt. FICO’s solutions have been implemented by some leading P2P companies in China, US and other international markets, helping them gain greater competitiveness.
For more information please visit: http://subscribe.fico.com/alternative-lending-platform.
FICO (NYSE: FICO) is a leading analytics software company, helping businesses in 90+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company’s groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption. These include the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health. FICO: Make every decision count™. Learn more at www.fico.com.
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