Motor Finance Arm of South Africa's Nedbank Uses FICO Analytics to Stress-Test Auto Loan Portfolio Performance FICO Economic Impact Service will help lender improve capital management and regulatory reporting
LONDON, April 25, 2013 /PRNewswire/ -- FICO (NYSE: FICO), a leading predictive analytics and decision management software company, today announced that Motor Finance Corporation (MFC), part of the Nedbank Group in South Africa, is using FICO analytics to predict the future performance of its auto loan portfolio. This project extends Nedbank's use of the groundbreaking FICO® Economic Impact Service to manage lending decisions and regulatory compliance.
For this initiative, MFC is using custom FICO Economic Impact Service models to study how the credit risk at different credit score bands would change under different economic scenarios. The FICO models apply this analysis to both MFC's custom origination and behavior models and the EMPIRICA® credit risk score at TransUnion, all developed by FICO. MFC are also using FICO's "grade migration" methodology to explore how current customers' credit risk scores would change under these scenarios as the economy changes. By understanding how specific economic variables could affect credit risk for both new applicants and current borrowers, MFC can develop more accurate projections of credit risk and losses, and thus improve its capital management and regulatory control function.
"We already rely on FICO analytics in our auto lending business, and this engagement gives us a dynamic way to forecast loan performance," said Francois van Rensburg, head of Credit Risk Modelling at Motor Finance Corporation. "FICO's sophisticated economic impact analytics will help us not only manage our capital better but also improve our reporting to South African bank regulators."
"We were an early adopter of FICO's innovative approach to economic modeling, and saw that it could also give us further control over our auto loan portfolio," said Hanlie Roux, who is the senior statistician for Scorecards of the Retail Credit Lab. "FICO's team are consulting with us as we adopt this methodology in other parts of our business. We see our analytic partnership with FICO as a distinct competitive advantage."
"Nedbank has an advanced analytics practice that really sets the bank apart," said Hayley Kershaw, general manager for FICO in Europe, the Middle East and Africa. "In the wake of a global economic crisis, we believe economic impact modeling should become standard practice for credit risk management and capital management. Much of the lending industry will be playing catch-up with Nedbank."
Nedbank's Hanlie Roux will present a session on "Adjusting Risk Scores with Macroeconomic Forecasts" at FICO™ World 2013, April 30-May 3 in Miami. For more information, visit www.ficoworld.com.
FICO (NYSE: FICO), formerly known as Fair Isaac, delivers superior predictive analytics solutions that drive smarter decisions. The company's groundbreaking use of mathematics to predict consumer behavior has transformed entire industries and revolutionized the way risk is managed and products are marketed. FICO's innovative solutions include the industry-leading solutions for measuring credit risk, managing credit accounts, identifying and minimizing the impact of fraud, and customizing consumer offers with pinpoint accuracy. Most of the world's top banks, as well as leading insurers, retailers, pharmaceutical companies and government agencies, rely on FICO solutions to accelerate growth, control risk, boost profits and meet regulatory and competitive demands. Learn more at www.fico.com. FICO: Make every decision count™.
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