Recently, the Commerce Department reported that consumer spending levels continued to rise in February, increasing for the fifth straight month *, while flat income levels drove savings levels lower. At the same time, media outlets such as Fox Businesses, reported that the consumer “shopping cart” ** showed price increases for the fourth straight month. Somewhat in opposition to this market trend, the Q4 2009 Experian-Oliver Wyman Market Intelligence Reports reveal that the average level of credit card debt per consumer decreased overall, but showed increases in only one score band. In the Q4 reports, the score band that demonstrated balance increases was VantageScore® credit score A – the super prime consumer – whose average balance went up $30 to $1,739. In this time of economic challenge and pressure on household incomes, it’s interesting to see that the lower credit scoring consumers display the characteristics of improved credit management and deleveraging; while at the same time, consumers with credit scores in the low-risk tiers may be showing signs of increased expenses and deteriorated savings. Recent delinquency trends support that low-risk consumers are deteriorating in performance for some product vintages. Even more interestingly, Chris Low, Chief Economist at FTN Financial in New York was quoted as saying "I guess the big takeaway is that consumers are comfortably consuming again. We have positive numbers five months in a row since October, which I guess is a good sign,".  I suggest that there needs to be more analysis applied within the details of these figures to determine whether consumers really are ‘comfortable’ with their spending, or whether this is just a broad assumption that is masking the uncomfortable realities that lie within.

Some of the third party fraud scenarios that are often top of mind with our customers: identity theft; synthetic identities; and account takeover.

By: Wendy Greenawalt In my last few blogs, I have discussed how optimization can be leveraged to make improved decisions across an organization while considering the impact that opimizing decisions have to organizational profits, costs or other business metrics. In this entry, I would like to discuss how optimization is used to improve decisions at the point of acquisition, while minimizing costs. Determining the right account terms at inception is increasingly important due to recent regulatory legislation such as the Credit Card Act.  Doing so plays a role in assessing credit risk, relationship managment, and increasing out of wallet share. These regulations have established guidelines specific to consumer age, verification of income, teaser rates and interest rate increases. Complying with these regulations will require changes to existing processes and creation of new toolsets to ensure organizations adhere to the guidelines. These new regulations will not only increase the costs associated with obtaining new customers, but also the long term revenue and value as changes in account terms will have to be carefully considered. The cost of on-boarding and servicing individual accounts continues to escalate while internal resources remain flat. Due to this, organizations of all sizes are looking for ways to improve efficiency and decisions while minimizing costs. Optimizing decisions is an ideal solution to this problem. Optimized strategy trees (trees that optimize decisioning strategies) can be easily implemented into current processes to ensure lending decisions adhere to organizational revenue, growth or cost objectives as well as regulatory requirements.  Optimized strategy trees enable organizations to create executable strategies that provide on-going decisions based upon optimization conducted at a consumer level. Optimized strategy trees outperform manually created trees as they are created utilizing sophisticated mathematical analysis and ensure organizational objectives are adhered to. In addition, an organization can quantify the expected ROI of decisioning strategies and provide validation in strategies – before implementation. This type of data is not available without the use of a sophisticated optimization software application.  By implementing optimized strategy trees, organizations can minimize the volume of accounts that must be manually reviewed, which results in lower resource costs. In addition, account terms are determined based on organizational priorities leading to increased revenue, retention and profitability.