FICO® Platform delivers standout results in
credit line assignment; HSBC wins 2024 FICO Decisions Award
FICO World – FICO (NYSE: FICO)
Highlights:
- HSBC is using FICO® Platform to grow its credit card
portfolio
- The project saw a 15% uplift in monthly spend by customers on
their cards, as well as improvements in active card use and share
of wallet, without increasing bad debt
- HSBC won a 2024 FICO® Decisions Award for AI, Machine Learning
and Optimization.
Today at FICO® World, the industry’s leading analytic and AI
event, FICO announced that HSBC, one of the world’s largest banking
and financial services organisations, has used AI-powered
mathematical optimization technology to grow its credit card
portfolio. The project saw a 15% uplift in monthly spend by
customers on their cards, as well as improvements in active card
use and share of wallet, without increasing bad debt. HSBC has won
a 2024 FICO Decisions Award for AI, Machine Learning and
Optimization.
More information: Optimization | FICO
Watch the HSBC UK team tell their story on video.
“With FICO optimization, we can adjust credit limits to each
customer’s risk, reward and engagement levels, and manage them with
scientific precision, at speed, as our strategy and the economic
climate change,” said Mike Roberts, head of unsecured retail
risk, HSBC UK.
The retail banking sector in the UK is particularly competitive,
and customers have fractured wallets, with three financial
relationships on average. As part of its digital journey, HSBC has
been focused on creating easy-to-use, tailored customer
experiences, whilst delivering long-term revenue growth. The HSBC
credit card portfolio was one of the areas targeted for sustainable
and responsible growth by providing tailored credit line increase
offers to customers.
“Setting new credit limits through testing programs is
inefficient, and could damage customer relationships,” said
Roberts. “By using FICO’s mathematical optimization, we were
able to simulate responses to customer engagement, levels of spend,
activations, loss rates, profitability and customer outcomes,
whilst factoring in changes in economic and regulatory conditions.
We were also able to better meet customer needs by targeting offers
to customers that wanted and would use a credit line increase.”
HSBC worked closely with FICO to design the decision influence
process that captured their credit line increase business. Eight
action-effect models were created to forecast the impact of the
existing credit line increase strategy. These models were
configured within FICO® Platform, together with HSBC’s own profit
calculations, and a suite of around 40 scenarios were developed to
find the best solution.
When COVID 19 hit in 2020, HSBC rapidly redeveloped the
strategies to deal with the new economic climate. Despite reduced
demand for credit during lockdown, the optimised strategy proved to
be more effective than its previous strategy at generating card
use.
In July 2023, the UK passed Consumer Duty regulations, aimed at
ensuring banks delivered products and services that are tailored to
individual’s needs, deliver fair value, and do not put consumers at
risk of unaffordable debt. By using FICO® Decision Optimizer’s
precise mathematical techniques, HSBC is well equipped for
determining the best outcomes and assisting its customers to deal
with this regulatory change.
“The ability to test vast decision strategy possibilities,
inter-relationships and subsequent permutations in volumes and
scenarios is way beyond the capacity of the human brain to
calculate,” said Roberts. “At the same time, we are
executing explainable decision strategies that provide the
visibility and certainty to know that we are doing the right thing
for customers.”
“Decision optimization is one of the most advanced tools a
lender has,” said Nikhil Behl, chief marketing officer at
FICO. “HSBC has again shown its leadership in the market
with this project.”
“To get an advantage in one of the world’s most competitive
credit markets is an outstanding achievement,” said Paul
Robinson, VP credit management at Canadian Tire Bank and one of the
FICO Decisions Awards judges. “The judges were impressed
by HSBC’s savvy use of optimization and its ability to balance
numerous objectives and constraints to find more successful options
for its customers.”
To see the full list of this year’s FICO® Decision Awards
winners, check out:
https://www.fico.com/en/decisionsawards
About the FICO Decisions Awards
The FICO Decisions Awards recognize organizations that are
achieving remarkable success using FICO solutions. A panel of
independent judges with deep industry expertise evaluates
nominations based on measurable improvement in key metrics;
demonstrated use of best practices; project scale, depth and
breadth; and innovative uses of technology. The 2024 judges
are:
- Andrew Birmingham, editor, Mi3
- Eric Kavanagh, CEO Bloor Group and host, InsideAnalysis
- Elizabeth Lumley, deputy editor, The Banker
- Paul Mah, senior editor, CDO Trends
- Laura Martins, editor, IT Forum
- Paul Robinson, VP credit management at Canadian Tire Bank
(Previous Winner)
- Shiv Sehgal, EVP audience analytics at RSG Media (Previous
Winner)
- Nick Vitchev, director at Chartis
The winners of the FICO Decisions Awards will be spotlighted at
FICO® World 2024, April 15 – April 18, 2024 in San Diego,
California.
About FICO
FICO (NYSE: FICO) powers decisions that help people and
businesses around the world prosper. Founded in 1956, the company
is a pioneer in the use of predictive analytics and data science to
improve operational decisions. FICO holds more than 200 US and
foreign patents on technologies that increase profitability,
customer satisfaction and growth for businesses in financial
services, insurance, telecommunications, health care, retail and
many other industries. Using FICO solutions, businesses in more
than 100 countries do everything from protecting 4 billion payment
cards from fraud, to improving financial inclusion, to increasing
supply chain resiliency. The FICO® Score, used by 90% of top US
lenders, is the standard measure of consumer credit risk in the US
and has been made available in over 40 other countries, improving
risk management, credit access and transparency.
Learn more at https://www.fico.com
FICO is a registered trademark of Fair Isaac Corporation in the
U.S. and other countries.
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version on businesswire.com: https://www.businesswire.com/news/home/20240415064399/en/
For further comment contact: FICO UK PR Team Wendy
Harrison/Parm Heer/Matthew Enderby ficoteam@harrisonsadler.com 0208
977 9132
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