The Profitability Paradox

In the middle of a recession — or what seems like one — you get what I call the profitability paradox. Simply put, banks don’t want to lend to customers who want credit, even though these tend to be the most profitable customers. How does this work? If a customer...

Bankers getting ready to loosen the purse strings

In my last post, I discussed the optimism of US bankers regarding loan delinquencies in our latest quarterly risk survey. On another positive note, survey respondents also indicated that access to credit was likely to improve. When asked about credit availability over the next six months, the majority of respondents...

Optimism grows among US lenders

Are US bankers embracing the economic recovery? According to our latest quarterly survey of 200+ US risk officers, it certainly looks that way. This sentiment is in sharp contrast to the grim forecast expressed in our recent survey of European risk managers. The US survey showed that risk managers expect...

Inextricably Linked, for Better or for Worse

Last week, more than 30 senior risk officers from 12 countries across Asia Pacific gathered at the second annual FICO APAC Chief Risk Officer Forum in Bali, Indonesia. Hosted by FICO and moderated by IDC, the forum provided a venue for us to have an in-depth discussion around what’s ahead...

Analytics for more profitable originations

One way FICO clients are boosting profits in originations is by using analytics that provide critical insights into a wider range of factors affecting the performance of new accounts. Here are three key areas where we've found analytics can sharpen origination decisions: 1. Macro-economic impacts on credit risk Analytics can...

Needed: A consumer-led recovery

In his keynote address at FICO World 2011 this morning, FICO CEO Mark Greene laid out an imperative for economic recovery. Banks, he said, need to rebuild the relationship with consumers. Mark cited the recession of 2008 as the first since World War II that was consumer-triggered, starting with consumer...

A New Approach to Credit Scoring (video)

In the wake of the recession, and with a rocky recovery in the UK, lenders need to get a more holistic view of borrower risk. FICO and Equifax have partnered to bring two new scores to the UK market, to indicate a consumer's credit capacity and show how their risk...

Restoring banking balance

In August, I blogged about the notable regulatory guidance issued by the Monetary Authority of Singapore, which called for increased capital levels and – more significantly – an accelerated timeline mandated by Basel III. I also talked about the three key lessons from global financial crisis: More capital. More liquidity....

Why increased capital adequacy is only part of the solution

We’ve blogged a lot about the various proclamations of the Basel Committee, specifically how our banking clients around the world are using analytics to ensure capital adequacy and manage portfolio risk. Under the most recent Basel III measures, banks would have to hold six percent of Tier 1 capital, up...

How Profitable Are Your Customers?

Customer profitability is a critical question, no matter if you are a bank in a slow-growth market (where it’s probably regulation and slashed operating budgets that are making your job harder) or a high-growth market (where you have been so focused on originating and acquiring customers, that you may have...

How Much of the 80% Do You Capture?

Up to 80% of the risk associated with the entire lifecycle of an account can be determined at the point of application. Are you capturing this much of the risk, and using it to improve your origination decisions? It’s a critical issue today, as lenders try to find profitable customers...

Will Europe see a wider credit gap?

In the new European Credit Risk Outlook report issued by FICO and Efma, risk managers across Europe weigh in on credit supply and demand. With the pressure on for banks and other lenders to fuel economic growth through making credit available, will the supply meet the demand? Respondents in most...

How will regulations affect Europe's credit supply?

What do European credit risk managers see ahead for credit supply and demand? That’s what FICO and Efma asked in the first European Credit Risk Survey, and the report, released today, shows a mixed response. One thing risk managers across Europe agreed on is that regulations are likely to tighten...

Profitable line increases after the CARD Act

The CARD Act has posed a number of challenges for issuers, not the least of which is how best to determine a consumer's “ability to pay”—a requirement that applies not only to new accounts, but also for credit line increases. The predominant response from issuers has been to implement an...

Welcome to the FICO Banking Analytics blog — why are we here?

- Posted by Tom Quinn, FICO® Score Product Manager Today's bankers are information junkies. We should know - as the creators of the FICO® score and other predictive analytics solutions, we are constantly providing our clients with new research and insights into credit trends. We created this blog to share...