Best Practices for Modeling Regulations

Financial institutions have had a difficult time adapting to the latest regulatory guidance regarding model validation and management. But making the right improvements can also translate into better analytic performance and risk management. To both comply and compete, it's critical to build an organizational policy for comprehensive model and credit...

FICO® Score Distribution Remains Mixed

Based on a fresh look at the national distribution of FICO® 8 Scores, it appears that the profile of credit risk for U.S. consumers, while still mixed, may be slowly returning to a prerecession pattern. As my colleague Andrew Jennings has noted, people with higher FICO® Scores have generally increased...

Customer-Centric Innovations in Fraud Analytics

There's tremendous emphasis on increasing customer centricity in banking these days, and indeed a big focus of my fraud analytics team is developing “customer-focused” innovations. These analytic models go beyond focusing solely on the characteristics of typical fraud events; they’re also built to improve learning of what typical customer behavior...

To Boost Customer Centricity, Focus on Your High Spenders

Many banks have automated rules in place that decline card transactions indicative of high fraud risk. In so doing, they block a large portion of fraudulent transactions. But they are also declining legitimate purchases from high-spending cardholders, who may decide to take their card business elsewhere. A FICO study found...

Reducing the Impact of Card-Not-Present Fraud

The internet has opened up virtually unlimited opportunities for entrepreneurs and zealous shoppers alike. On the flip side, it unfortunately has also opened up opportunities for crooks, especially credit card thieves. Recent fraud trends show card-not-present (CNP) fraud—and predominantly online fraud—taking up an increasingly greater percentage of total credit card...

Dynamic Detection for the Global Fraud Fight

Those of you who follow this blog know that I regularly discuss analytic innovations that boost fraud detection. One such innovation is adaptive analytics, so-called because these models continually "adapt" traditional neural network fraud models in response to real-time fraud tactics that were not present at the time of model...

Join Us For FICO World 2013

How are companies using Big Data analytics to understand and collaborate with today’s connected consumer? Join us at FICO World 2013 to discover answers from experts and network with your banking peers. Registration is now open for the conference, which will be held April 30-May 3 in Miami. FICO World...

Big Data in Fraud: A Need to Stream

Today’s buzz around Big Data is bringing renewed attention to the need for streaming analytics—a focus that, if you ask me, is long overdue. In the payment card space, we at FICO are celebrating the 20th anniversary of using streaming analytics for fraud detection. Our FICO® Falcon® Fraud Manager models...

FICO® Scores Reflect Slow Economic Recovery

Our FICO Labs team has taken a fresh look at national distribution of FICO® 8 Scores. With a couple of interesting exceptions, we found that consumer scores are continuing their slow return to a pre-recession pattern. The first two years of the recession (2008-2009) moved the scores for millions of...

Fraud Analytics That Adapt on the Fly

A major implication of Big Data, as I discussed in my last post, is that analytics must rely less on persistent (historical) data and instead adjust dynamically in the stream. This is particularly true for fraud analytics, given the ever-changing nature of fraud. Here's an example. Development of the traditional...