Representing the next phase of FICO’s longstanding commitment to financial inclusion innovation, these programs make it easy for the market to rapidly test and adopt alternative data solutions
FICO, a leading global analytics software firm, announced the launch of its Inclusion Accelerator Program and Financial Inclusion Lab to advance lender adoption of alternative data solutions by creating an incubator for lenders to test new credit decisioning tools. The incubator is the next phase of FICO’s Global Financial Inclusion Initiative focused on the development of new scoring products, partnerships, services, and platforms to enhance lenders’ decision making and forward financial inclusion efforts around the world.
“We’re hearing positive feedback from our dealerships in our indirect channel now that we’re able to help more younger applicants with auto lending assistance compared to some of our competitors”
As a longtime innovator in the use of alternative data in credit scores, FICO’s Inclusion Accelerator Program and Financial Inclusion Lab will be a catalyst in enabling the lender community to foster broader alternative data adoption, and enable a more inclusive lending system rooted in accessibility. Since 2015, over 50% of FICO’s R&D investment in its Scores segment has focused on broadening financial inclusion globally. FICO® Scores using alternative data sources can enable credit access for an estimated 1.3 billion consumers globally.
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“FICO was first to market in bringing broad based alternative data scoring products like UltraFICO Score and FICO Score XD to drive financial inclusion. With the Inclusion Accelerator Program and Financial Inclusion Lab, we are taking the next step in helping lenders to more easily adopt these solutions and to learn how to effectively incorporate them into their workflow,” said Sally Taylor, vice president and general manager of B2B Scores at FICO.
These initiatives take on the ambitious role of providing lenders with streamlined assessment tools related to FICO’s latest innovations in credit scores, which can help accelerate adoption across the industry. Drawing on reliable new sources of data, more than 229 million US consumers can be scored by the FICO® Score Suite, more than any other broad-based credit scoring model in the market.
“As a big believer in testing different data sources to drive financial inclusion, my priorities in testing the potential of UltraFICO Score with demand-deposit account (DDA) attributes were broadening access to credit, speed to market, simplicity and leveraging an existing scorecard already built on the data – and it didn’t hurt that FICO was the organization that developed and branded it from a marketing, approval and compliance standpoint,” said Dale Robinson, an early adopter of consumer-permissioned DDA data and scoring in retail credit, and an independent financial services consultant with over 20 years of experience as a credit risk executive at Ameriprise Financial Services, Bluestem Brands, HSBC and U.S. Bank.
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Lenders participating in the Inclusion Accelerator Program and Financial Inclusion Lab will have access to new tools and technologies to enable them to further expand their lending decisions to support their financial inclusion initiatives. FICO has been diligently striving toward increasing the number of lenders using these financially inclusive products, with efforts including:
- The launch of FICO® Score XD 2 in 2018 expanded coverage to score more than 26.5 million previously unscorable consumer files. 11.8 million of these consumers were without credit files and previously unscorable by any scoring system relying on traditional credit bureau data alone.
- In 2018, FICO launched the UltraFICO® Score focused on consumer contributed data. With the UltraFICO® Score, consumers are empowered to leverage their checking and savings account data to enhance their score. If a consumer has a low FICO® Score, or no score at all, they have a chance to increase their score, or establish one, based on data they share – allowing lenders to expand access to credit through their financial inclusion initiatives.
- At FICO® World 2023, banking simulation specialists BankersLab® (bankerslab.com) will host participants in a UltraFICO® Simulation Challenge that will run during the event. This friendly competition allows participating lenders to experiment with the UltraFICO® Score in a “what-if” simulation which aims to challenge expertise and knowledge of alternative data scores. Overall, participants will learn how harnessing open banking data through the UltraFICO® Score can drive financial inclusion initiatives and portfolio profitability at the same time.
“We’re hearing positive feedback from our dealerships in our indirect channel now that we’re able to help more younger applicants with auto lending assistance compared to some of our competitors,” said Jason Wabrick, vice president of retail lending at General Electric Credit Union. “We learned that adopting a new alt data score isn’t enough, we needed to invest time to help our underwriters become familiar and comfortable with relying upon the new score for underwriting decisions.”
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