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FICO® Master File Characteristic Library

www.fico.com Make every decision countTM

B ig data poses new opportunities as well as many unprecedented challenges to

financial organizations trying to maximize the value of their predictive models in balancing portfolio risk and performance. Analytics teams may have implemented sophisticated automation in their modeling lifecycles, yet continue to face problems in transforming information into actionable insights. As a result, more organizations are rushing to leverage endorsed signals to extract the best possible features from available data and use them in both design and implementation. Empowered with actionable data, analysts can build more models with accelerated deployments on a more regular basis. In turn, this enhances an organization’s agility and enhances the decision-making capabilities of account and customer management systems with heretofore greater value.

A robust new analytic resource—the FICO® Master File Characteristic Library—is now available to meet the difficult challenges of drawing signals out of overwhelming amounts of data by propelling lift in predictive models. By using the Characteristic Library to evolve the predictor variable set populating a target model, organizations can boost modeling precision and elevate gains in portfolio performance and marketing ROI.

As an added benefit, the FICO Master File Characteristic Library is bundled with FICO® Model Builder to help analysts most efficiently maximize the predictive power of their customer-centric models. Within a single solution, analysts can easily augment their characteristic sets with the full breadth of FICO characteristics, which are constantly maintained with meticulous logic and attention to fairness, accuracy and extensive documentation. In this way, analysts are able to more rapidly pinpoint the exact characteristics that drive better decision performance.

predictive analytics

Boost predictive power with decades of research and experience

One way to leverage the value of big data is through the use of characteristics—predictive model components that translate low-level information from multiple fields and records into potent predictive features. Well-crafted characteristics find signals and actionable insights to support confidential portfolio decisions. Bundled with FICO® Model Builder, the FICO® Master File Characteristic Library offers the most useful characteristics today for developing predictive models for many different applications.

Clients receive a significant improvement in predictive power when using the new FICO® Master File Characteristic Library even when compared to existing FICO® TRIAD® 8 characteristics. The table shows the improvement resulting from a model development using actual client data. Improvements in predictive power are particularly strong in delinquent populations.

in K-S% Improvement

Population

Total 1.7% 1.9%

Current 4.6% 1.3%

One Cycle 12.5% 3.9%

Two Cycle 19.0% 4.3%

% Improvement in Divergence

With the FICO® Master File Characteristic Library, you can:

• Improve portfolio management decisions by deploying FICO Model Builder and the Characteristic Library models to FICO® TRIAD® Customer Manager, FICO® Blaze Advisor® business rules management system and other solutions.

• Build predictive models more efficiently and cost-effectively without burning time on generating and testing unproven characteristics.

• Add predictive power to models and decision applications with well-documented, proven characteristics.

• Save time deploying models without needing to recode source logic from development while reducing the likelihood of errors.

• Maintain predictive modeling value with ongoing FICO support.

Experience gains in predictive power across delinquency levels

» Accelerating Time-to-MarketWhy should analytics teams take months or even years to build and validate unproven characteristics? Analysts become more focused on dealing with the headaches of decision management than on understanding business goals, learning and collaboration. Further, when analysts are confined to an organization’s own data, they may not have the volume necessary or may not have captured enough data over time to determine highly predictive variables. It may also not be clear how to aggregate data elements into truly meaningful characteristics that enhance decision performance and lead to actions that maximize the value of predictive models.

The FICO® Master File Characteristic Library accelerates and simplifies the development and deployment of custom predictive models. Better custom models are founded on better characteristics. The Characteristic Library provides analysts with new capabilities to more rapidly and cost-effectively determine which characteristics are the most predictive—even if they have limited resources or insufficient data that can obstruct the modeling lifecycle. Ultimately, the Characteristic Library enables predictive analysts to speed up their models’ time-to-market and time-to-value.

» FICO® Model BuilderAs a powerful extension to Model Builder, the Characteristic Library enhances Model Builder’s feature-rich capabilities that allow analysts to accelerate the creation and deployment of sophisticated analytic models. Model Builder intelligently automates tasks so that analysts can focus on analyzing, experimenting and refining models. In addition, the Characteristic Library and Model Builder bundle makes it easy to modify the characteristic source code, thereby enabling organizations to build custom characteristics, and thus drive greater precision into their predictive models. The Library can be deployed easily to FICO® TRIAD® Customer Manager, FICO® Blaze Advisor® business rules management system and other solutions.

» Support for Multiple Products, Portfolios and Model Types

FICO® Master File Characteristic Library is extensible to just about any product line or portfolio a financial organization can deploy. Products include (but are not limited to) Revolving Credit, Installment Loans, Auto Lending, Mortgage, Current Account (Demand Deposit), Deposit Accounts (Savings), Student

Loans and many others. The bundled solution supports both customer and account-level treatments.

Organizations can use the Characteristic Library bundled with Model Builder to activate lift in their models for risk, attrition, bankruptcy, collections, roll-rate, cross-sell response, propensity to pay, revenue, marketing and more. Whether deploying models as standalone scoring systems or within business rules flows, the Characteristic Library helps organizations improve all important decision areas. FICO understands how organizations improve decision performance by enabling more potent predictors and signal detectors that can turn raw information into action—even with young or early-stage accounts.

» More Usable Characteristics FICO characteristics lead the industry in depth, breadth, accuracy and suitability. Driving higher value with more usable characteristics helps organizations implement strategies to be more agile and expand the customer base, deepen understanding of customer behavior and risk across the lifecycle, reduce delinquencies and charge-offs, and grow their top and bottom lines.

The completeness of FICO characteristics is echoed in the depths of their analytics reach.

Characteristics are defined and organized by measurement type, data element and duration. This provides a comprehensive view of the borrower across all relevant dimensions. Analysts can even use the Master File Characteristic Library to examine the population of closed accounts, better identifying risk associated with accounts that are closed but still maintain a balance.

» Well-Documented Characteristics

Conducting thorough, updated documentation of variables is a vital part of custom modeling and performing related tasks such as segmentation. The Characteristic Library offers Model Builder’s proven capabilities to streamline and manage variables documentation—on the scale of a Master File. This unique benefit helps to remove potential issues with documentation consistency between different analysts. Instead of dealing

www.fico.com Make every decision countTM

This cross-section of measurements, field types and timeframes are representative of the types of characteristics that are available in the FICO® Master File Characteristic Library.

Product

Time Since

Number of

Averages

Percentages

Ratios

Trends

C

urrent C

ycle

3

Cycles

6

Cycles

12 Cycles

24 Cycles

…

Understand FICO® Master File Characteristic Library Contents

with technical complexities, analysts find they are free to focus on validating models and maintaining regulatory compliancy, e.g., Basel compliance.

Well-documented characteristics make it possible to discuss and achieve buy-in with stakeholders in a clear, concise language. The Characteristic Library license opens up the complete FICO set of variables documentation, which includes labels, full descriptions and calculations (in both source format and plain language) that is bolstered by ongoing FICO support. Analysts are able to qualitatively examine a model’s limitations and derive a clearer understanding of scoring and calculated characteristic values.

» Improving Decision Performance

Cost Savings—The FICO® Master File Characteristic Library enables organizations to save time and reduce costs in model development and implementation. Using the same source logic in the deployment as in the development process makes testing faster and ensures consistency between the analytic laboratory and runtime systems.

Revenues—Improving portfolio decisions with more powerful predictive models helps organizations maximize revenues per account or customer. In a waterfall effect, better decision performance with portfolios lowers additional costs thanks to increased operational efficiency. Improving decision performance also enhances the effectiveness and costs of targeted and behavior-based marketing.

Scalability and Dynamic Strategies—Ultimately, the FICO® Master File Characteristic Library bundled with FICO® Model Builder is a powerful analytic resource to help organizations simplify their predictive modeling lifecycles and improve decision performance. The Characteristic Library is flexible to scale with the rapidly changing needs of any business. Decades of FICO excellence and trusted expertise stand behind the Characteristic Library. Robust updating of characteristics and innovative FICO technologies will help to maintain improved decision performance for any analytics team managing complexity and evolving logic over time.

FICO , TRIAD, Blaze Advisor and “Make every decision count” are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries. Other product and company names herein may be trademarks of their respective owners. © 2013 Fair Isaac Corporation. All rights reserved.

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