25% of Brazilian families have sizeable debt

The Brazilian newspaper O Estado de S. Paulo recently reported that 25% of Brazilian families dedicate more than a third of their income toward debt payment. While a surprising statistic, it makes more sense once you realize that most have modest discretionary income. On average, 70% of income is tied...

US housing: Where do we stand?

I had the opportunity to attend and present at a Pew Charitable Trust Symposium last week in Washington. It convened a group of experts from government, the private sector and academia to discuss the state of the US housing market, and what the federal government and industry might do to...

Faster Collections ROI

No matter where they're located, collections managers generally face the same challenges. In recent online polls taken during a series of FICO webinars in North America, the biggest priorities for collections heads were: Nearly two-thirds of respondents were focused on driving innovation in early-stage collections or across the entire lifecycle....

With Fraud, Collaboration Trumps Competition

During various speaking engagements last year, I was repeatedly asked by financial institutions about how their peers were dealing with large payment card compromises. I decided to form a working group of issuers to explore this topic further, with the intention of publishing results. I had no idea that I...

Fighting fraud through customer communication

Financial institutions today are acutely aware of the need to improve communication with customers. It's the bedrock of many efforts to retain and build more profitable relationships. Not to mention it can be a huge asset in the fight against banking fraud. There are some excellent new ways to enable...

Analytics can help build long-term relationships

Credit Union Management magazine’s latest “CFO Focus” column, written by FICO blog author Chisoo Lyons, shares insights on the value of analytics for credit unions. Here’s an excerpt: But what’s the best way to reach Sally with this custom offer? A good analytics system can help with that, too. The...

Can Cheap Money Beat the Profitability Paradox?

The big financial news in the UK today is that the Bank of England will give around £80 billion to UK banks at below-market rates, for them to lend to consumers and businesses. The government expects this "funding for lending" scheme to expand lending, thereby stimulating the economy and helping...

A New Job for Risk Managers: Driving Profits

Daniel Melo has posted additional thoughts about The Profitability Paradox on BankThink, the American Banker blog. Here’s an excerpt: “This profitability paradox has created a new role for risk managers. Retail bank risk managers have not traditionally had to think much about capital management, but that is changing. Under regulatory...

Time-to-Event Modeling – The Way to Sophisticated Marketing

In today’s world we as consumers are constantly bombarded with marketing messages -- through SMS, phone calls, web interface, credit card statement, email ... the list goes on. There’s so much noise that in many countries regulators are taking action against companies that are seen as overly aggressive with their...

Brazilian banks invest in IT to counter rising fraud

Last year, Brazilian banks lost half a billion dollars to electronic fraud, according to the latest figures from the Brazilian Banks Federation (Febraban). Febraban plans to disclose full details at its CIAB 2012 event next month, but clearly, electronic fraud is a growing concern. Indeed, that figure is a 30%...

Proposed FDIC Insurance Assessment Rule is an Industry Win

Kudos to the FDIC! As the financial services industry continues to deal with a wave of Dodd-Frank regulations, it is encouraging to see regulators working with industry to arrive at a better solution. The result is a newly proposed FDIC rule on deposit insurance assessment pricing among large banks. The...

A Better Way to Treat Inquiries

In my last post, I discussed the specialized logic in the FICO® Score that accounts for loan rate shopping by consumers. As a quick refresh, this includes the score treating all student loan, auto and mortgage inquiries within a 45-day period as a single inquiry—what’s called an inquiry “deduplication (dedupe)...

Making decisions based on current market behavior

Test-and-learn cycles have taken on new importance since the financial crisis. In many markets today, there's been so much change that historical data is no longer sufficient for predicting customer behavior. The speed with which creditors can understand and adapt to how consumers are currently behaving in the market is...