Extending Credit to New Markets: Q&A with Itaú Unibanco

Itaú Unibanco is Brazil’s largest private sector bank and the ninth largest globally. But when it launched its credit card as an initial entry into the highly competitive Mexican market, it had to adopt startup-style strategies. Key to the effort was an origination process using FICO® Capstone® Decision Accelerator to...

Using Mobile Technology to Improve Customer Interactions

Even lenders with the best analytics and decision management platforms often struggle to communicate advice and offers to customers. Wouldn't it be great if they could do so via a low-cost channel that their customers actually enjoy using, and thus is likely to yield more and higher-quality responses? Together with...

Zero to Hero: Aiming for Best-in-Class Originations

Emerging markets in Asia are seeing tremendous growth in credit applications at the moment, particularly in countries like the Philippines, Thailand and Indonesia. The Philippines, for instance, has witnessed credit card growth by volume between 10 – 15%, and Asia Pacific is expected to move from the third to second...

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...

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...

PNC's Gordon Cameron calls for a new approach to lending

In his keynote address today at FICO World 2011, PNC Executive Vice President and Credit Executive Gordon Cameron said that banks need a new approach to lending, in order to adapt to a fast-changing marketplace and economic pressures. Speaking to a sold-out audience of 700 bankers from 42 countries, Cameron...

Fundamentals of analytic learning loops

My last few posts have discussed the analytic learning loop. By accelerating feedback about market performance, analytic learning loops enable banks to target the right products to consumers most likely to respond and generate profits. And banks can adjust decision strategies to boost results while campaigns are still ongoing. So...

Propelling growth with analytic learning loops

These days, economic volatility, new regulations and competitive forces all make analytic learning speed and yield critical to success. In my last post, I discussed how an “analytic learning loop” accelerates feedback about market performance, enabling banks to make decisions based on how consumers are behaving today. By providing a...

Origination strategies of the best-in-class

In a recent post, I broke down a simplified origination decision model to illustrate how it can be used to improve decision strategies. But many of our clients are beginning to look to more advanced uses of these analytics, to boost originations performance. These lenders are leveraging custom decision models,...

Moving away from a fixed view of customer behavior

These days, portfolio growth and a bank's ability to quickly understand and adapt to changing consumer behavior are interconnected. The challenge, of course, is that traditional approaches to acquisitions and originations, based on analyzing past behavioral data, provide a historic view of customer risk and reward potential. But in today's...

New Mortgage Standard Must Be Predictive

A major debate underway in our nation’s capitol hinges on how federal regulators choose to define a “Qualified Residential Mortgage” (QRM). Opposing sides agree on one thing: this decision could fundamentally change America’s real estate industry. After researching a key component of the debate, FICO has found a significant flaw...

Closing the Voters’ Roll Fraud Loophole

Fraud consultants at FICO have warmly welcomed the announcement on 30th June 2011 by Mark Harper, the British minister for political and constitutional reform, to change the process by which households register to vote in the UK. Currently households register as one to vote, which has allowed people to be...

European lenders rank profit-building measures

With European banks under pressure on capital, fees, margins and just about everything else, lenders are considering a number of options for improving profitability. In the second European Credit Risk Survey, conducted by FICO and Efma, lenders put the likely options in this order. The figures show the percentage of...

Breaking down an origination decision model

While decision modeling and optimization are employed by top financial services firms in some decision areas, they have not been a standard part of the origination process for most lenders. But this is changing—not only because of economic, regulatory and market pressures, but because technology advances (e.g., SOA approaches) now...

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...

Preparing for new score disclosure regulations in July

On the heels of the Federal Reserve/FTC’s risk-based pricing rule that went into effect January 1, lenders must immediately turn their attention to the next set of regulations governing credit score disclosures. As part of the Dodd-Frank financial reform bill, Senator Mark Udall added a provision that requires credit scores...

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...

New Regulation Raises Consumer Awareness of Credit Scores

While the FICO® Score is certainly no stranger to thousands of US banks and credit unions, a new federal regulation is introducing this important three-digit number to millions of consumers for the first time. The Fair Credit Reporting Act’s risk-based pricing rule, issued by the Federal Reserve and the Federal...

Connecting decisions at originations

In a recent post, I made the case for why lenders must be able to consistently make profitable originations decisions in diverse and changing credit markets. As a result, it’s critical that origination solutions allow lenders to bring a wider range of analytics to bear on credit applications for sharper...

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...

“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...

New survey reveals top fraud threats and vulnerabilities

What are the top fraud threats to financial institutions? How are they fighting back? New results from our Faces of Fraud Survey provides some answers—and a few surprises. The survey, conducted by ISMG and sponsored by FICO, polled hundreds of financial institutions, primarily banks but also credit unions and payment...

How will new banking entrants change the game?

Even in today’s banking environment — with new regulations and economic change putting the squeeze on profits — there are new players who see opportunities. In some cases they may be players who already have a captive consumer base, such as retailers. In others, they will be new competitors who...

Take advantage of that Magic Moment!

For any customer, the moment he or she decides to enter into a relationship with your organization — or modify an existing relationship — is a Magic Moment! This is a moment when the customer has identified their need, made the decision to fill that need, and given you the...

Have mortgage underwriting standards become too strict?

Recently, Zillow.com questioned the tight loan requirements now in vogue among mortgage lenders. The company, an online marketplace where borrowers shop for mortgage rates and loans, says the tougher criteria "keeps a cap on housing demand, which is important for the greater housing market recovery." Certainly no one wants a...

How credit scores improve DDA acquisition strategies

Savvy deposit managers realize that account opening is an excellent opportunity to assess credit risk in order to refine acquisition strategies. We see clients increasingly leverage FICO® credit scores within these strategies, from setting pricing and shadow limits to up-selling credit products tied to deposits. Here’s an inside look at...

Assessing Risk for First-Time Homebuyers

It is a great time to be a first-time homebuyer. Interest rates are hovering at 4.5% for a 30-year fixed rate mortgage, and real estate values are beginning to stabilize. For lenders focused on providing credit to these new homeowners and growing origination volumes, new FICO research shows the benefits...

New ID Fraud Technique

The AP recently released an article that describes the latest technique criminals are using to slip in through the back door of the credit application process. This technique targets fresh or clean Social Security Numbers (SSN) that belong to children or people who have been in prison for most of...

FICO® Scores in mortgage lending — a few facts

When it comes to FICO® Scores for mortgage origination, several myths remain frustratingly hard to kill. Case in point: They resurfaced again in a recent column in the New York Times. It’s worth restating some of the plain facts about the use of FICO Scores in mortgage — facts that...

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...