Shop Direct Group will use FICO models custom-designed for their business to understand how changes in the UK economy would change the risk levels of individual customers, and the risk of its credit portfolio. With these actionable assessments, Shop Direct Group can test portfolio sensitivities and adjust its credit offers and policies both nationally and at the regional level, in order to match its risk appetite.
“Shop Direct Group wants to give our customers the credit they need, while at the same time ensuring that economic changes don’t leave our customers or our company overexposed to risk,” said David Poole, Shop Direct Financial Services’ Chief Operating Officer. “With FICO’s custom analytics, we can take a more forward-looking view of risk when extending credit. We chose FICO because of their track record with this innovative approach and our success with using their analytics to refine our decisions. We are also pleased with FICO andEquifax’s work to make economically adjusted risk assessment more widely available in the UK.”
The FICO Economic Impact Service is a patent-pending analytic service that helps lenders adjust their use of risk scores based on economic projections and lender-defined scenarios. The service examines up to 150 different economic indicators, then scientifically calibrates credit risk estimates to expected market conditions, at the account level. With the ability to build on both internally derived score models and standard credit scores, the FICO Economic Impact Service provides lenders with unprecedented, actionable insight into credit risk under current or projected economic conditions. FICO provides custom analytics to European lenders, and is also integrating these analytics with other scoring solutions as part of its expanded partnership with Equifax in the UK.
In August, FICO’s groundbreaking research into economic impact grade migration modeling, part of the FICO Economic Impact Service, was honored with the Paragon Award for the Best Paper at the Credit Scoring and Credit Control XII conference in Edinburgh.
“The ‘new normal’ for leading credit grantors today is adaptation to change,” said Mike Gordon, FICO vice president and managing director of Europe, the Middle East and Africa. “Shop Direct Group joins a select group of EMEA business leaders that are using economic impact analytics to safeguard their business and their customers.”
Shop Direct Group operates a number of retail brands that sell to consumers primarily through catalogues and websites, including Littlewoods, Very.co.uk and isme,. The group serves customers in the UK, Ireland and continental Europe. Shop Direct Group has worked with FICO since 2004, and uses FICO predictive analytics and optimization to make customer credit decisions.About FICO
FICO (NYSE:FICO), formerly known as Fair Isaac, delivers superior predictive analytics solutions that drive smarter decisions. The company’s groundbreaking use of mathematics to predict consumer behavior has transformed entire industries and revolutionized the way risk is managed and products are marketed. FICO’s innovative solutions include the industry-leading solutions for measuring credit risk, managing credit accounts, identifying and minimizing the impact of fraud, and customizing consumer offers with pinpoint accuracy. Most of the world’s top banks, as well as leading insurers, retailers, pharmaceutical companies and government agencies, rely on FICO solutions to accelerate growth, control risk, boost profits and meet regulatory and competitive demands.
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