(San Francisco, California, USA) - While a majority of executives at the top 50 U.S. banks and credit card issuers describe the credit crunch as a "manageable setback," another 33 percent consider it a systemic threat or a severe challenge to their institutions, according to a new survey conducted by TowerGroup for Fair Isaac Corporation (NYSE: FIC), the leading provider of analytics and decision management technology.
"No one doubts the seriousness of the current credit crisis, but it's noteworthy that the largest financial institutions are more likely than others to characterize its impact as severe or worse," commented Theodore Iacobuzio, managing director and practice leader, TowerGroup. "The fact that these larger institutions took on more risk in recent years and are feeling more pressure now that delinquencies are rising and defaults are increasing certainly has something to do with that perspective."
The survey results, released at Fair Isaac's 2008 InterACT Americas customer conference, validated the hunches of many in the financial services industry in recent months, while also revealing some surprising insights. Among the findings:
- 55 percent of respondents regard the current credit crisis as a manageable setback, while 33 percent consider it either a "severe challenge" or a "systemic threat" to their institution
- More than 50 percent cited increased credit delinquencies as the biggest challenge they expect to face in the next two years
- The top investment area among respondents in the coming 12 months is in the area of analytics, with fully 75 percent planning such improvements
- While roughly half of respondents currently have an enterprise-wide fraud solution in place in their organizations, those who do not are most daunted by the perceived complexity of implementing one
The survey also pointed to an emerging growth area: optimization. The majority of respondents reported that they use optimization techniques to inform decision making within multiple functional areas, and 80 percent expressed interest in applying these techniques to credit risk - more than fraud, collections, or any other area of risk management.
"In the current environment, more and more financial institutions are looking at using optimization techniques to manage risk and identify revenue opportunities," said Andrew Jennings, chief research officer, Fair Isaac Corporation. "The ability to make smarter decisions based on an understanding of the benefits and trade-offs of multiple scenarios will become increasingly critical as lenders seek to maintain profitability."
The survey, conducted in March 2008, targeted senior risk management and credit executives at the top 50 U.S. banks and credit card issuers and focused on risk management, fraud management, collections and views about connected decision making. A total of 108 executives participated, representing consumer banks (39%), credit card issuers (23%) and other lending institutions (38%). More information about the survey results and methodology can be obtained from TowerGroup.
About Fair Isaac
Fair Isaac Corporation (NYSE:FIC) transforms business by making every decision count. Fair Isaac's Decision Management solutions combine trusted advice, world-class analytics and innovative applications to give organizations the power to automate, improve and connect decisions across their business. Clients in 80 countries work with Fair Isaac to increase customer loyalty and profitability, cut fraud losses, manage credit risk, meet regulatory and competitive demands, and rapidly build market share. Fair Isaac also helps millions of individuals manage their credit health through the www.myFICO.com website. Learn more about Fair Isaac at www.fairisaac.com.
Fair Isaac Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements contained in this press release that relate to Fair Isaac or its business are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the success of the company's Enterprise Decision Management strategy, its ability to recruit and retain key technical and managerial personnel, the maintenance of its existing relationships and the ability to create new relationships with customers and key alliance partners, it ability to continue to develop new and enhanced products and services, competition, regulatory changes applicable to the use of consumer credit and other data, the possibility that the anticipated benefits of acquisitions, including expected synergies will not be realized and other risks described from time to time in Fair Isaac's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2007, and its quarterly report on Form 10-Q for the period ended December 31, 2007. Forward-looking statements should be considered with caution. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Fair Isaac's results could differ materially from Fair Isaac's expectations in these statements. Fair Isaac disclaims any intent or obligation to update these forward-looking statements.
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