Transcript FICO Corporate Template

FICO™ Forum: Debt Manager™ 9 User Group
Fairfax, VA | June 4–5, 2014
Analytics in Debt Manager 9
Reports, Dashboards, Scores, Models
David Lightfoot
Vice President, Product Management
FICO
Martin Germanis
Vice President, Sales
FICO
Doug Thompson
Principal Consultant, Pre-Sales
FICO
Joe Milligan
Lead Engineer, Product Support
FICO
© 2014 Fair Isaac Corporation. Confidential.
This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation's express consent.
Agenda
2
►
Taxonomy
►
Reports and Dashboards
►
Predictive Analytics
►
Prescriptive Analytics
© 2014 Fair Isaac Corporation. Confidential.
Three Types of Analytics…
3
Descriptive
Predictive
Prescriptive
“What’s happening
and why?”
“What might
happen?”
“What action should
we take?”
© 2014 Fair Isaac Corporation. Confidential.
Reports and Dashboards
4
© 2014 Fair Isaac Corporation. Confidential.
Reports Overview
►
Analysis Reports (Spindown, History)
► Note
►
List-type Reports (Account Status, List of Pending Pmts)
► Note
►
Perspective param, doc map on left
drilldown/drillthroughs
Dashboards (Agent Collection Effort)
► Note
gauges/chart functionality
►
Creating subscriptions
►
Report Builder
► Explain
5
model vs. replicated data
© 2014 Fair Isaac Corporation. Confidential.
Reports and Dashboards
What else would
you like to see in
Debt Manager 9?
6
© 2014 Fair Isaac Corporation. Confidential.
Predictive Analytics
7
© 2014 Fair Isaac Corporation. Confidential.
Business Challenges
8
►
Inherent debtor differences
►
Insufficient strategy differentiation
© 2014 Fair Isaac Corporation. Confidential.
Collections Predictive Models & Scores Overview
►
Determine customer debt
likelihood
►
Increase productivity
►
Target and treat different
customers & strategies
The Model is the thing that produces the Score
9
© 2014 Fair Isaac Corporation. Confidential.
Off-the-Shelf Models in Debt Manager 9.5
Roll Rate Models
- Predict
probability that customer is going to
increase in delinquency
Payment Projection Models -
Predict
the amount of payments from certain account
holders
10
© 2014 Fair Isaac Corporation. Confidential.
Roll-Rate Scores in Debt Manager 9.5
Early Stage 1 Cycle - Rank-orders accounts
based on probability of rolling from cycle one to
cycle two
Early Stage 2 Cycle - Rank-orders accounts
based on probability of rolling from cycle two to
cycle three
11
© 2014 Fair Isaac Corporation. Confidential.
Payment Projection Scores in Debt Manager 9.5
► Rank-orders
accounts based
on expected collection
amount for accounts that go
to cycle three & beyond
12
© 2014 Fair Isaac Corporation. Confidential.
Custom Models Overview
Industry Specific Model
Customer Bankruptcy Model
►
Understand the likelihood of a
customer going bankrupt
►
Adjust collections strategies
13
© 2014 Fair Isaac Corporation. Confidential.
►
Different collections & recovery models
for different industries
►
Target customers most effectively
Account Type Model
Different models
for different
product types
Collections Scores Business Value
►
15 - 20 % better account segmentation
►
Improved customer service
►
Improved resource utilization
►
Get up-and-running quickly
►
No model development data
requirements
►
Deployed with your system
14
© 2014 Fair Isaac Corporation. Confidential.
Predictive Analytics
What else would
you like to see in
Debt Manager 9?
15
© 2014 Fair Isaac Corporation. Confidential.
Prescriptive Analytics
16
© 2014 Fair Isaac Corporation. Confidential.
Strategy Challenges
►
High levels of delinquent customers
►
“Mature” portfolios with diminishing returns from current
strategy
►
Same or lower capacity
17
© 2014 Fair Isaac Corporation. Confidential.
Prescriptive Analytics is the
process of modeling and
improving (optimizing) decisions
and treatments using data and
predictive models
18
© 2014 Fair Isaac Corporation. Confidential.
Maximize Value at Every Stage
Pre-Delinquency
Strategies
Early Stage
Collections
60
90
120
150
180
Recovery
Primary
Secondary
Key Objectives
Characteristics
30
Late Stage Collections
19
• Welcome Calls
• Reduce roll rates
• Service
Adjustment
• Focused on highrisk accounts
• Default
Avoidance
• Identify self-cures
• Focus on maximizing
collections
• Determine sequence of actions
that yields best results
• Identify early-outs
C h a n n e l
© 2014 Fair Isaac Corporation. Confidential.
M a n a g e m e n t
• Maximizing recoveries
• Determine channel that will
yield most return
• Consider settlements
Case Study – European Bank
BUSINESS CHALLENGE
SOLUTION AND BENEFITS
• Improve
performance of
early stage
collections
strategies on
unsecured
portfolios
Decision Modeling and Optimization
for Early Stage Collections
• Reduce roll rates
• Achieve all this
without increasing
expenses
or headcounts
20
© 2014 Fair Isaac Corporation. Confidential.
FICO® Decision Optimizer
• 3-month KPI: Bucket 1-Bucket 2 roll-rate
reduced by 3%
• 6-month KPI: Bucket 1-Writeoff roll-rate
reduced by 10%
• 3-year ROI expected to be 24:1
Unlocking value from prescriptive analytics –
Four key steps
DECISION MODELING
DECISION OPTIMIZATION
Evaluates and monitors data that
would impact decisioning
Builds a graphical model for one or
more decisions
Solves for profit-improvement risk
management strategies
Allows users to apply robust
constraints
Establishes mathematical
relationships within key
variables
Allows users to stress-test results
DECISION DEPLOYMENT
Incorporates optimized strategies
into core processing solutions
immediately
Manages and maintains the
decisioning strategies to
efficiently respond to market
demands and changes
21
© 2014 Fair Isaac Corporation. Confidential.
SCENARIO ANALYSIS
Uses permutations on key
constraints to evaluate
alternatives
Explores range of what’s possible
Step 1: Model Customers’ Reactions to Your Actions
Customer
Risk score = 680
Rev Balance = $12,250
Rev Util = 61%
Time in File = 132
Segment = A
Action
Option
Delayed Call
1
E(Roll) = 5%
E(Pay) = $250
E(Attr) = 3%
Option
2
Gentle Call
E(Roll) = 4.7%
E(Pay) = $260
E(Attr) = 3.8%
Urgent Call
E(Roll) = 4.4%
E(Pay) = $290
E(Attr) = 4.8%
Option
3
22
© 2014 Fair Isaac Corporation. Confidential.
Reaction
Step 2: Simultaneously Consider All Possible Actions
with Constraints
Decision Model
Customer
Solver
Portfolio
23
© 2014 Fair Isaac Corporation. Confidential.
Action
Reaction
Delayed Call
E(Pay)=$175, P(Attr)=2%
Gentle Call
E(Pay)=$180, P(Attr)=2.4%
Urgent Call
E(Pay)=$187, P(Attr)=3.4%
Action
Reaction
Min Roll Rates; Same Staff
$5 BB Annual Profitability
Min Attrition; Less Staff
$5.2 BB Annual Profitability
Balanced Approach
$5.32 BB Annual Profitability
Step 3: Consider Multiple Scenarios and Select Best
Operating Point
Efficient Frontier – Early Stage Collections
Choosing the optimal operating point from multiple choices
Projected PROFIT per Account
120
115
Scenario G
Increase profitability by $10 per
account, without incurring
additional expense
H
J
E
D
110
C
105
Current Operating
Point
B
Where you are today
Scenario B
100
Maintain profitability per account
and decrease expense by 6%
A
95
-10%
24
F
G
Efficient
FICO Optimization
helps you
understand Frontier
I
all options
© 2014 Fair Isaac Corporation. Confidential.
-5%
0%
5%
Projected CHANGE IN RESOURCE over "Baseline"
10%
Step 4: Operationalize Benefits
» Optimized treatments can be converted into filters, jobs and
strategies in Debt Manager in order to execute consistent
decisions every month, week, day, etc.
» Datasets with optimized treatments can be loaded directly
into collection system if optimization is run every month,
week, day, etc.
25
© 2014 Fair Isaac Corporation. Confidential.
Examples of where FICO has applied Prescriptive
Analytics in Collections and Recovery
26
Area
Prediction
Example Objective
Pre-delinquency
Potential for customer to become
delinquent
Minimize collection expense
Early stage collections
Priority and treatment of accounts
Maximize profit
Mortgage workouts
Restructure terms
Maximize NPV
Minimize loss
Credit card settlements
Which accounts to settle pre-charge
off
Minimize loss
Settlement after charge-off
Who is the most likely candidate for a
settlement and for what $ amount
Maximize money collected
Maximize profit
Agency placement
Which accounts to place with which
agency
Maximize profit
Maximize money collected
Collections optimization
What is the overall potential impact
Minimizing costs
Maximizing return
© 2014 Fair Isaac Corporation. Confidential.
Prescriptive Models Summary
27
© 2014 Fair Isaac Corporation. Confidential.
►
Better assess & target customers
►
Optimize strategies
►
Efficiently allocate resources
Prescriptive Analytics
What else would
you like to see in
Debt Manager 9?
28
© 2014 Fair Isaac Corporation. Confidential.
FICO™ Forum: Debt Manager™ 9 User Group
Fairfax, VA | June 4–5, 2014
Thank You
David Lightfoot
415-446-6332
[email protected]
Martin Germanis
571-386-3001
[email protected]
Doug Thompson
303-973-7942
[email protected]
Joe Milligan
571-386-3015
[email protected]
© 2014 Fair Isaac Corporation. Confidential.
This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation's express consent.