With COVID 19 causing more economic uncertainty than ever, many savvy portfolio managers are seeking out improved risk assessment capabilities for their personal lending, credit card, auto loan, and other retail portfolios. Amidst this uncertainty, MDC’s partnership with FICO to deliver a Member Score that helps our owners while they are making these decisions has become more valuable than ever.
MDC’s partnership with FICO emerged from MDC’s Member Score Project, an idea generated in the 2017-2018 NextUP Program. FICO was selected as MDC’s Member Score implementation partner by a project advisory team of MDC owners after evaluating several potential vendors and competing services.
The Member Score product provides an alternate analytic approach to assessing credit risk that leverages your credit union’s internal data from members’ deposit/checking accounts, loans, and credit cards to create a score that delivers additional insights on likely repayment behaviors. Designed to complement the credit bureau-based FICO Score, the Member Score is delivered via FICO’s Analytic Cloud, allowing your organization to benefit from a more precise assessment of member credit risk within 10-12 weeks.
Since all scores are based on internal relationship data, there are no permissible purpose restrictions on score generation and usage, and as scores are generated on a batch basis (as frequently as each month), they can be made accessible by the beginning of each month without the need to reach out to any external databases.
FICO’s Member Score enables your organization to:
- Increase collection efficiency
Using the Member Score to prioritize collection activities will result in reduction in net charge-off
- Manage members more effectively and mitigate risk
The Member Score can be used to guide member management policy such as incentive distribution, pricing, fee waiver, and line management
- Differentiate creditworthiness across the entire credit lifecycle
Build on data from your history of customer interactions
- Improve risk-aware marketing
Create highly targeted outreach efforts that focus on pre-approval for your most creditworthy customers
- Drive retention
Identify and proactively support customers who show early signs of difficulty in meeting their payment obligations
- Maximize the use of all available data
Leverage your proprietary data and the unique relationship you have with your members
MDC owners can also leverage FICO’s Member Score to rank-order their members based on their likelihood to make payments. This allows collection efforts to be prioritized while ensuring that members who will self-correct will not be needlessly contacted—a critical goal for preventing a negative member experience. FICO’s Member Score provides an additional 15%-20% predictive power compared to the exclusive use of a bureau-based score for early-stage collection.
Here’s an example of how FICO Member Score can be used to prioritize collection activities:
FICO’s Member Score has been validated across several credit unions, and the results show that the score successfully rank-orders credit union members for this type of decisioning.
In short, FICO’s Member Score improves portfolio results while driving a better member experience. Deployed through FICO’s Analytic Cloud, credit unions using the Score can expect rapid time-to-value with low risk and low upfront investment.
FICO stands ready to work with any MDC owner to prove the value of an investment in implementing a Member Score at your credit union. More information about the FICO’s Member Score, including pricing and pilot results from other MDC credit unions, is available for MDC owners on MDC Connect.