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
LONDON, April 25, 2013
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
"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'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
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