Data asset or data liability?

One distinguishing factor of successful businesses is how well they capture, maintain, access and interpret data. Why is it, then, that many businesses fail to adequately protect their data assets, and even more fail to provide for sufficient contingency should data become lost, damaged, corrupt or compromised? Data compromise remains...

Is There Really Safety In Numbers?

In a week where FICO has published its interactive fraud map showing how European card fraud has changed over the last 5 years, and reflected on the considerable reductions across the UK card fraud market, there was a cautionary tale issued by the mass media. The Guardian has published an...

Regulations still choking European credit

“Asphyxiating” is a strong word, but that’s the word used at a recent meeting of banking leaders in Spain to describe the effect Basel regulations are having on credit. The meeting, hosted by FICO and the publication Expansion, demonstrated bankers’ frustration and showed that regulators are still searching for the...

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...

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...

Big Data Changes the Analytics Paradigm

Big Data is a hot topic today that stems back to the early days of high-performance computing and parallel computing, which I worked on during my time in theoretical physics at Duke and Los Alamos. These days, Big Data tools facilitate the ease in applying these concepts. Interestingly, much of...

Mobile Opens the Door for Better Fraud Detection

Mobile banking services will become increasingly important to consumers, as more and more adopt smartphones and use them to stay in touch with their personal financial pictures. My colleague Paul Swyny recently blogged about the growing opportunity to leverage mobile communications in banking. In particular, we're finding the mobile channel...

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.

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...

Innovations in collections analytics

At a recent collections and recovery webinar that I co-presented, I polled attendees to find out what area they felt could be improved to drive the biggest C&R gains. An overwhelming 50% said it was technology. Process also emerged as a key theme, coming in second at 18.2%. These results...

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...

European Credit Delinquencies Will Rise Further

The need for small business credit is making headlines in many European countries, with politicians often railing against banks for “withholding” credit. Anyone wondering why banks are being conservative with their lending should review the latest European Credit Risk Outlook released by FICO and Efma. According to more than 100...

The Buzz on Customer Centricity

My recent conversations with banking professionals in Asia Pacific has made one thing very clear: customer-centricity is all the buzz nearly in every conversation. Every bank is trying their best to attract customers by putting their best foot forward. Despite gloomy news on the economic horizon, particularly in Europe, the...

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...

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...

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...

Cybercops & robbers: Digital posses to bust bank bandits

FoxNews.com has covered recent news on joint anti-crime efforts between FICO and the FBI Bandit Shield program, quoting FICO fraud blogger John Buzzard. Here's an excerpt: Bank robbers lost their cool when six-guns went out of style, but they’re still just as dangerous: In 2010 alone, 90 people were taken...

Web Banking Fraud Actually in Decline

American Banker recently published an article on the decline in internet banking fraud losses and the emerging threat of first-party fraud. FICO fraud experts, including fraud blogger Brian Kinch, are quoted. Here's an excerpt: Most of the recent attention in fraud technology has been on third-party fraud. The most common...

Consumer spending rises on UK cards

In today’s environment, even moderately good economic news needs to be celebrated. FICO just released card performance data from December 2011 that shows average sales per UK-issued card rose to a two-year high of just over £600. As reported in our news release, average card sales in December 2011 were...

Cutting capital requirements would increase lending

The Banker just published some interesting research on how lower bank capital requirements could boost the economy. Their numbers suggest that cutting capital requirement by just 1% would dramatically increase lending power, enabling the UK to increase bank assets by an amount equal to about 37% of GDP — for...

Enterprise fraud: It's all about relationships

Remember the shock of hearing Darth Vader tell Luke Skywalker, “I am your father”? That’s pretty much the worst-case scenario for a family meeting. Many people have a similar shock when they discover that they need to tell their own bank about their relationships with it. Like Luke, the bank...

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....

The hidden face of first-party fraud

FICO and Equifax convened a meeting with card and banking industry fraud experts on 23rd February to talk about new approaches needed to the mounting threats presented by, particularly, first-party fraud across the credit lifecycle and third party fraud at applications stage. The site was appropriate: the St James's Hotel...

Making cards less vulnerable to fraud (CBS video)

In the video below, CBS 5 San Francisco interviews FICO fraud expert and blogger Doug Clare in a segment on chip (smart) cards. Doug explains why these cards are less vulnerable to fraud than magnetic stripe debit and credit cards, and the challenges for adoption in the US. If you...

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...

How customer relationships impact credit risk

For banks that have made it their mission to deepen their product holdings with customers, here is some clear evidence that your relationship with a customer can influence their credit risk. FICO recently studied two Spanish clients’ loan performance, and the results indicated that the risk of a customer on...

Digital Strategies Revolutionizing Collections

Blog author Daniel Melo discusses how digital strategies are revolutionizing collections in a new article for InsideARM. Here's an excerpt: It’s fair to say that consumers don’t like dealing with collections agents. That’s not to say that most of them don’t or won’t pay their bills, but rather that they...

Know Your Customer – Hot Topic for APAC CRO Forum

As you heard from fellow blogger Dan McConaghy, FICO recently partnered with IDC to host what is probably the biggest gathering of banking CROs in Asia Pacific. A hot topic at the FICO APAC CRO Forum was customer profitability – how to expand existing customer relationships whilst offering superlative customer...

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...

Celebrating fraud innovation

I'm proud to announce that FICO® Falcon® Fraud Manager 6 Analytics was named a finalist in the CONNECT Most Innovative New Product Awards, in the software category. This accolade was driven by the analytic innovations that I often blog about here, including: Adaptive Analytics, which are reducing account false positive...

Despite Basel sticker shock, banks soldier on

A new study by the Boston Consulting Group finds that banks globally face a $450 billion (€350 billion) Basel III shortfall, as reported today in the Financial Times. According to the study, banks in Europe have the biggest gap, more than half of the total. While stunners like this make...

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...

Collections provides wins for mobile banking

Digital strategies are revolutionizing collections performance today. Using mobile banking as a channel for collections makes customers feel like the communication is personal, and gives them choices over their payment terms. The results don’t lie: As noted by Telrock CEO Russell Robinson in a presentation we gave at FICO World...

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...

UK cardholders paying less of their card balances

FICO has just released UK card data for September that shows a worrying pattern. The percentage of their balance that holders of classic cards paid off in September hit a two-year low. Combined with a rise in cash usage and lower average credit lines, the data suggests that consumers are...

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.

The Hidden Benefits of Social Banking

Retail Banker International has published "The Hidden Benefits of Social Banking," a blog post by FICO's Mike Gordon, vice president and managing director of EMEA. In the post, Mike discusses the use of social and digital channels for collections and recovery. Here's an excerpt: Placing the customer in control of...

Risk management gains strength in Europe

In my previous post, I discussed some of the more negative findings from our new European Credit Risk Outlook. But it’s not all doom and gloom. In our recent survey, credit risk managers across Europe clearly indicate that they are better prepared now to deal with a rise in risk....

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...

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...

Building Customer-Level Profitability: Q&A with Mashreq Bank

In the lead-up to FICO World in November, FICO interviewed Mashreq Bank Vice President Khalid Zafar, who will co-present “Building Customer-Level Profitability in a Changing Environment.” At the conference, Zafar will share how Mashreq Bank redefined its predictive analytics and decision strategies to better deal with changing consumer behavior, risk-reward...

Fighting Enterprise Fraud

Increasingly banks are looking to leverage the full breadth of data related to customers to make better decisions, and fraud is no exception. There is a strong desire to break down silos, so fraud/risk behaviors in one area of the customer’s interaction with the bank can be utilized in other...

New Analytics for Emerging Payments

Payment cards are changing. Whereas a plastic card used to access a single funding account, now we increasingly see cards—and very soon, mobile phones—that can access multiple funding accounts. This trend not only increases personalization options, but also fraud detection capabilities, if you leverage a cardholder’s history of what funding...

Electronic fraud on the rise in Brazil

The Brazilian Banks Federation (Febraban) recently released data from a survey revealing that losses caused by electronic fraud are on the rise. These losses totaled R$ 685 million (US$ 460 million) from January to June this year, up from R$ 504 million (US$ 340 million) for the same period last...

Join a conversation with PNC Bank’s Gordon Cameron and FICO CEO Mark Greene

What are the approaches that banks are taking to create growth in a weak economy with greater regulation? Join a discussion about this next week with FICO CEO Mark Greene and PNC Bank SVP and Credit Executive Gordon Cameron. This special FICO World Preview Webinar will take place on Friday,...

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....

Changing payments means changing fraud detection

The traditional credit/debit card has become passé—at least in terms of having a single device with access to only one funding account. Today, a single card can, at the point of sale, access different accounts to fund the payment transaction. Likewise, a mobile device has the capability to make payments...

Bank of England supports counter-cyclical risk approach

Robert Peston, BBC, reported the speech by the UK Chancellor of the Exchequer at the Lloyds of London annual dinner: "…. Mr Osborne last night gave a nod that he might agree with Mr Cameron, by lauding a paper recently written by the influential Bank of England economist, Andrew Haldane,...

Closing the Gap on Fraud Model Degradation

Fraudsters are continually adjusting their strategies to circumvent fraud detection systems. In my last few posts, I've been discussing how adaptive analytics are built to counter this problem. Because of this, the latest version of FICO™ Falcon® Fraud Manager leverages adaptive analytics. The adaptive model adjusts the base neural network...

FICO fraud chief discusses mobile banking fraud on Bank Info Security

Bank Info Security has published a bylined article on mobile banking fraud by FICO fraud chief and blog author Mike Urban. In the article, Mike discusses points of vulnerability, as well as security and detection measures. Here's an excerpt: For today's retail banks, mobile banking is seen as table stakes,...

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...

Strengthening conventional fraud detection

Financial institutions are always looking for ways to combat newer fraud schemes—schemes that arise between fraud model developments and are not well-represented in the historical data. As I discussed in a recent post, one way to boost performance is to add analytics that are adaptive or self-learning. Deploying adaptive models...

Optimizing Credit Limits Under New Regulations

July 2012. Add a reminder to your Outlook calendar, because that’s when new Australian regulatory changes for credit card lending will take effect—specifically Phase 2 of the National Consumer Credit Protection Act 2009 (as detailed in my colleague Paul Swyny’s recent post). What does this mean to portfolio managers throughout...

How can fraud models combat new tricks?

The fight against payment card fraud resembles an arms race. Card issuers are deploying ever more sophisticated anti-fraud measures, and fraudsters are continually evolving strategies to evade those measures. Typically, issuers rely upon neural network fraud models trained on huge historical datasets to recognize recurring fraud patterns and reduce fraud...

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...