Automated credit scoring, an innovation pioneered by FICO during the 1950s, serves the global credit card business well, but saturated markets need to develop new customer streams to fuel growth and offset attrition.
New methods to discover potentially creditworthy new customers outside the bounds of traditional credit scoring are emerging for both consumer credit and small business credit. Credit cards have a particular need to reach beyond traditionally saturated customer segments such as high net worth and mass affluent. Small businesses with limited credit history also have an urgent need for credit.
Credit Scoring as a Competitive Differentiator, discusses how traditional score functionality adapts to the current market and the potential of disruptive models.
"In order to maximize lending opportunities, lenders must stay at the forefront of credit scoring innovation," comments Brian Riley, Director of Credit Advisory Services and author of the report. "Some innovations are exciting but have not been proven through stressful business cycles, so be certain to balance risk and reward."
Highlights of the research report include:
- Alternative lenders posing retention issues for traditional institutions - Reaching underserved customers - Alternative methods for determining creditworthiness - A new approach to customer engagement - Using credit scoring to build deeper customer relationships
Key Topics Covered:
1. Executive Summary
3. Acquiring and Retaining Prime Customers Alternative Lenders Pose a Puzzling Retention Problem for Traditional Institutions
4. Reaching Underserved Customers Focusing on Underserved Verticals Identifying and Accurately Evaluating Underserved Customers Small Business Lending The Unscorable Consumer Population
5. Alternative Methods of Determining Creditworthiness Alternative Repayment and Public Record Data Social and Behavioral Data Two Different Approaches
6. A New Approach for Customer Engagement
7. Consumers Don't Understand Credit Scores A Suboptimal Credit Reporting Infrastructure Today: Engaging Customers and Prospects with Credit Score Monitoring
8. Tomorrow: Using Credit Scoring to Build Deeper Customer Relationships
- Barclaycard US - Branch.co. Consumer Financial Protection Bureau (CFPB) - Capital One - Discover - Equifax - Experian - FICO - Federal Reserve Bank of Philadelphia - Federal Trade Commission (FTC) - Lenddo - Lending Club - LexisNexis - Mintel Compremedia - On Deck Capital - Prosper Marketplace - Small Business Financial Exchange (SBFE) - Social Finance (SoFi) - TransUnion - US Department of the Treasury - ZestFinance