Twin Themes for Bank Strategies in 2012

 In a new article in Global Banking and Finance Review titled “European Credit: More Trouble Ahead,” FICO’s managing director for EMEA, Mike Gordon, discusses our most recent European Credit Risk Outlook. This report by FICO and Efma has been discussed in this blog by my colleague Daniel Melo, but...

European Credit Risk Report Signals Recession (CNBC Video)

On CNBC Squawk Box Europe, EMEA Managing Director Mike Gordon discusses FICO's latest European credit risk survey. The survey shows that nearly eight out of ten European risk managers believe Europe will plunge back into recession this year. If you're unable to view the CNBC video above, view it here.

Colombian banking: potential and peculiarities

Cards International recently published a country survey of Colombia and its potential for banking growth. They note that banks are profitable there and have low levels of non-performing loans. The banking industry appears to be poised for expansion in a market where only 57.6% of the 45 million people have...

Strategic Defaults Not Going Away Anytime Soon

I’ve been blogging about results from our latest quarterly survey of US bank risk officers – specifically how they expect loan delinquencies to drop and credit availability to expand. Today, I’ll focus on survey results from the housing sector. Notably, nearly 2/3 of respondents think strategic defaults will be as...

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...

More bad news for Europe’s small businesses seeking credit

Small business lending has been a focus for most European nations, looking to increase economic growth and cut unemployment. The going hasn’t been easy, and it’s not going to get easier. Results of FICO and Efma’s latest European Credit Risk Outlook, which surveyed more than 100 credit risk management professionals...

Four out of five European bankers see another recession coming

The latest European Credit Risk Outlook, published by FICO and Efma today, provides a grim forecast for Europe. More than 100 credit risk management professionals across Europe answered the survey in January and February, and here’s some of what they said: 79 percent of respondents forecast a new European recession...

Russians' credit health is strengthening

Much of the focus on the Russian election this week has put a spotlight on how far the country has come since perestroika and the end of the Cold War. Yesterday FICO released our own analysis on an interesting part of the country’s picture: the credit health of Russian consumers....

Balancing risk and growth in APAC

I've been blogging about FICO’s most recent quarterly survey of U.S. bank risk professionals, which included questions about global issues that could put pressure on the U.S. economic recovery. In my last post, I highlighted a noteworthy finding from respondents about China's economic growth as it relates to the future...

Global concerns impacting U.S. economy

In my last post, I shared the results of our quarterly survey of U.S. bankers that showed serious concerns about delinquencies on student loans, mortgages and credit cards. In that same survey, we asked about global issues that could put pressure on the U.S. economic recovery. When asked about the...

FICO CEO discusses risk survey on Yahoo! Daily Ticker (video)

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Student Loans Seen as Next Casualty of Sluggish Economy

The results of our quarterly survey of U.S. bank risk professionals are in. The number that really jumps out to me is 67%. That’s how many of our respondents expect delinquencies on student loans to rise. In the nearly two years we’ve been conducting these surveys, expectations for delinquencies on...

Webinar: Post-Crisis Analytics – 6 Imperatives for Raising Performance

In dynamic markets, there’s direct relationship between profitable portfolio growth and a bank’s ability to quickly understand and adapt to changing consumer behavior. At next week's free webinar "Post-Crisis Analytics – 6 Imperatives for Raising Performance," FICO will explore how card issuers can build competitive advantage by cultivating analytic learning...

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...

China's economy 'faces growth challenge' in the future (BBC video)

China's leaders are meeting this week to discuss ways to ensure the economy maintains its pace of growth despite the global economic slowdown. Data released on Monday showed November exports increased by just 13.8%, the slowest pace of expansion since February this year. China's manufacturing sector also contracted in November...

Peru poised for banking growth

After decades of very low banking penetration, the Peruvian banking market appears to be poised for growth. Up to now, around 70% of Peruvians have been outside of the official banking system, making banking penetration one of the lowest in Latin America. Why? Few have a regular job, and most...

Mobile Fraud: Q&A with Aite Group

As financial crime continues to expand and evolve, FICO interviewed Aite Group fraud analyst Julie Conroy McNelley about emerging threats in mobile banking security. Julie recently participated on the FICO World analyst panel on “Enterprise Fraud Management” and just published “Mobile Fraud: The Next Frontier,” a report based on Aite’s...

Half of bankers say 2012 will be less profitable for banks

Last week the Bank of England released a study showing that UK bankers’ confidence has dipped sharply over the last six months. We have seen similar results in our recent surveys of risk managers in the US and Europe. Here’s another data point: At FICO World 2011 earlier this month,...

Is the Chinese Consumer Ready to Drive Global Economy?

As we approach the end of the year, I’m having numerous discussions with banking executives and other clients about where we see the global and local Asia Pacific economy performing next year. I was asked to opine on this for Singapore’s business daily, Business Times. In short: Globally, it often...

Banking Health in Asia: FICO on CNBC (video)

On CNBC Squawk Box, FICO blog author and APAC managing director Dan McConaghy discusses how Asian banks are actively demanding analytics to understand their customers better in a risky environment. If you have difficulty viewing the video above, view it here.

European borrowers headed for trouble

The latest European Credit Risk Outlook, based on a survey of risk managers by FICO and Efma, gives a different picture than the one we released in June. The optimism in that report has largely slipped away. Credit risk managers across Europe now expect that more consumers will have trouble...

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...

How do you treat a strategic defaulter?

As I've mentioned previously on this blog, strategic defaulters have a unique set of characteristics not found among other defaulters. That means traditional account management and collections methods are less effective with them. So what's a mortgage servicer to do? Segment populations based on the dual dimensions of credit risk...

FICO Analysis: Strategic Default Problem Grows

A recent FICO data analysis found more than six million U.S. homeowners have a current-loan-to-value ratio of 120 or higher, meaning they are at least 20 percent underwater on their mortgages. Based on recent data from Fannie Mae, these homeowners are more than twice as likely as other borrowers to...

Consumer credit is still dicey

In my last blog post, I noted that the results of our quarterly survey of bank risk managers were quite negative on the topic of residential real estate. Unfortunately, the bad news didn’t stop there. When asked their opinions about consumer credit over the next six months, a large number...

FICO CEO discusses risk survey on CNBC, Reuters, Yahoo! Finance

FICO's latest quarterly survey of US bank risk professionals offered a decidedly pessimistic outlook, reversing the growing optimism seen in late 2010 and early 2011. The survey shows that bankers expect delinquencies on consumer loans to rise, underwriting standards to become stricter, and the housing sector to continue struggling far...

Is it really all doom and gloom in the U.S. housing sector?

In our latest quarterly survey of U.S. bank risk professionals, respondents offered an outright dismal picture of the housing sector. When asked if U.S. housing prices would climb back to 2007 levels before the year 2020, 49 percent of respondents said no. By comparison, only 21 percent said yes. And...

Learn more about modeling economic impact on credit risk

The FICO presentation on Economic Impact Grade Migration Modeling that won the Paragon Award for Best Paper at the Credit Scoring and Credit Control XII conference in Edinburgh last month has been posted online, along with the other conference papers, at: www.crc.man.ed.ac.uk/conference/archive/2011.html. I will be giving a webinar on this...

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....

Bloomberg TV: FICO CEO on Consumer Confidence and the Recovery (video)

On Bloomberg Television's "Countdown," FICO CEO Mark Greene discusses U.S. consumer credit, credit card use, and the U.S. and U.K. housing markets. To watch the video above, view it here.

Edinburgh conference award for economic impact modeling

I’m proud to note that FICO’s Johan Jansen van Rensburg and I won the Best Paper Prize at the Credit Scoring and Credit Control XII conference in Edinburgh last week. Our paper was on “Economic Impact Grade Migration Modeling - To Address Pro-Cyclicality in Current Risk Management Practice,” and addresses...

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...

Concern about housing sector still running high

In our latest quarterly survey of bank risk professionals, we found a strong negative outlook for the housing sector. Of course, this isn’t new. It continues a trend we’ve seen for a long time. While 18% of respondents expected mortgage delinquencies to decline over the next six months, 46% expected...

Bankers lose a bit of confidence in small businesses

In our quarterly survey of bankers, we look at banker sentiment for both consumer and small business credit. Unlike our findings related to consumer credit, bankers are somewhat pessimistic about the small business sector. Sentiment in Q2 reverted to the pessimism of 2010 after a brief improvement in the first...

Yahoo Daily Ticker: FICO CEO on the Outlook for Consumer Credit

On the Yahoo! Finance Daily Ticker, FICO CEO Mark Greene discusses FICO’s new US credit risk survey and the outlook for consumer credit. View the video below, and read the full article, "Consumer Credit Improving, but Housing to Remain a Drag: FICO survey."

FICO discusses consumer credit demand on CNBC Europe

On CNBC Europe, FICO VP and EMEA Managing Director Mike Gordon discusses FICO's European credit risk survey and the state of consumer credit demand: "The consumers are going to be driving more and more savings into the banks, but they're going to be demanding less credit instruments. Six months ago,...

Cautious optimism regarding consumer credit

As we do every quarter, we conducted a survey of U.S. bank risk professionals in Q2. Our survey found that bankers are cautiously optimistic about the financial health of consumers. We found that 38% of respondents expected credit card delinquencies to remain flat, while 31% expected them to fall, and...

Bloomberg TV: FICO CEO Discusses Jobs Data, Economy

FICO CEO Mark Greene discusses the June U.S. jobs report, and the outlook for the housing market and consumer confidence on Bloomberg Television's "InBusiness With Margaret Brennan." (Source: Bloomberg) If you're unable to see the video above, view it here.

The Counter-Cyclical Imperative in China

You’ve read from my colleague, David Molyneaux, on how the long-awaited publication of capital guidelines from the Basel Committee on Banking Supervision should help the financial industry emerge from the financial crisis stronger and better capitalized. Here’s some perspective on how that’s playing out in Asia Pacific. Many banks in...

Q&A: Dodd-Frank Amendment Could Impact Fraud

In an interview with GovInfoSecurity.com, FICO blog author and fraud expert Mike Urban spoke about the Durbin Amendment and its impact on fraud. Here's an excerpt: The highly debated proposal from Sen. Dick Durbin, D-Ill., would amend the Dodd-Frank Wall Street Reform and Consumer Protection Act by significantly reducing interchange...

The UK’s Second Important Wedding Benefits Banks

As anyone following the economic situation in the UK knows, these are trying times for banks and consumers alike. The Bank of England just released another disappointing growth report, and revised its projection down to 2.7 percent in 2011, and 2.8 percent in 2012. Overall productivity has eroded due in...

Strategic default: More than an ethics debate

Strategic defaults and the changing consumer stigma around defaulting on a mortgage make for an interesting ethical debate, argued in media outlets ranging from the Chicago Tribune to The PBS NewsHour. But ethics aside, let's not lose sight that strategic defaults have negative consequences for consumers, servicers and investors. Consumers...

Video: What's the profile of a strategic defaulter?

More American homeowners are choosing not to pay their mortgage, a phenomenon known as strategic default. In this video, Andrew Jennings, FICO's chief analytics officer, shares FICO Labs findings about new analytics for predicting strategic default and the profile of a strategic defaulter. If you have difficulties with the embedded...

Predicting strategic default

The incidence of strategic default is on the rise. But before mortgage servicers can take action, they first must be able to identify strategic defaulters. Standard credit risk scores aren't sensitive to the quite different characteristics of these voluntary strategic defaulters, whose behavior is driven by incentive to pay rather...

Who are your strategic defaulters?

Accurately predicting strategic default risk remains a big challenge for mortgage servicers. Because strategic defaulters behave differently from traditional mortgage defaulters, it's quite difficult for servicers to identify consumers with the greatest potential to strategically default. And after all, you can't predict what you can't measure. FICO recently conducted research...

More Hopeful Signs in Latest Banker Survey

As I mentioned a couple days ago on the blog, FICO’s most recent quarterly survey of bank risk officers gave us plenty of positive signals. In addition to anticipating a drop in delinquencies, bankers are expecting the “credit gap” to narrow in the coming months. Our survey of more than...

FICO CEO on CNBC Squawk Box: Credit Where It’s Due

On CNBC Squawk Box, FICO CEO Mark Greene discusses results from a new FICO survey of risk managers, as well as key issues affecting US consumer credit health. For those who can't see the embedded video above, view it here.

Finally … Optimism Among U.S. Bankers

Each quarter we survey a couple hundred bank risk officers about their expectations for consumer (and small business) credit. As you might expect, there was a lot of pessimism throughout 2010. But in our Q1 2011 survey, we found a big change … bankers are becoming optimistic! Most notably, respondents...

Research looks at how mortgage delinquencies affect scores

How much impact does a short sale have on FICO® Scores? How about a foreclosure? Since I frequently hear these questions from clients and others, I thought I’d share new FICO research that sheds light on this very subject. The FICO study simulated various types of mortgage delinquencies on three...

Post-crisis risk management

The advent of the economic crisis caused some core beliefs in traditional risk management to be tested. We had our very own stress test, not just of the portfolio but also of the tools used to manage that portfolio. As our models came under stress, regulators changed the rules that...

Cross-channel fraud – a problem for Asia Pacific, too

Fraud is a hot topic on this blog. I was particularly intrigued by what my colleague Mike Urban had to say on the emerging threat of cross-channel fraud. In our work with banks in Singapore and around Asia Pacific, we see that bank fraud continues to escalate, posing a costly...

Analytic Imperatives for a Post-Crisis World

How have analytic priorities changed as a result of the economic crisis? In this Tech Talk, FICO Chief Analytics Officer Andrew Jennings lays out new directions for analytics. He discusses the concepts of modeling decisions and predicting the impact of economic changes, and stresses the importance of the analyst/modeler, saying...

Basel III and Profitability

The new Basel III rules on capital and liquidity are focusing banks on how to achieve compliance with new ratios. But as McKinsey points out in a recent white paper, banks also need to start developing strategies and initiatives to enable them to make market-acceptable returns from their products and...

Credit Scores and Counter-Cyclical Risk Management

Basel III regulations call for banks to adopt a counter-cyclical approach to managing risk and capital. To avoid creating credit bubbles or prolonging economic recessions, risk measures should reflect the effect of the next economic cycle. FICO's David Molyneaux explains in this Tech Talk. Credit Scores & Counter-Cyclical Risk Management...

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...

What are the biggest fraud threats for 2011?

The new year often brings new resolutions, new ideas and fresh perspectives. Unfortunately, fraudsters are not immune, and will also come up with new schemes and deceptions. So what can banks expect from fraudsters in the coming year? The increased use of electronic deposits means that Remote Deposit Capture (RDC)...

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...

Navigating the new normal in Asia Pacific

Navigating today's banking "new normal" continues to be top of mind for businesses and policymakers—so much so, that I was recently asked to byline an article on the subject for Singapore’s Business Times. In the article, I identify three new realities of the new normal that we must wrap our...

“Get it right from the start” at originations

Today the accuracy of origination decisions is more important than ever. As banks require more capital in the wake of the financial crisis and in preparation for Basel III, new account risk must be assessed with greater precision. In markets where good customers continue to deleverage en masse, lenders must...