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World’s largest building society set to increase lending by at least £25 million annually

FICO, a leading predictive analytics and decision management software company, announced that Nationwide Building Society, the world’s largest building society, has won the 2014 FICO Decision Management Award in the Customer Originations category. Nationwide has used FICO’s advanced decision management technology to build a Strategic Risk Infrastructure (SRI) that has helped improve customer service and make more credit available. Using the SRI, Nationwide estimates it will increase lending by at least £25 million each year.

“At many lenders, risk management is a compliance-focused process,” said Brian McDonough, research manager in IDC’s Business Analytics Solutions research service, who was among the award judges. “Nationwide has created a risk management infrastructure that increases revenue and customer satisfaction, and turned what is often a cost center into a profit center.”

At the core of the Nationwide SRI is an advanced decision management system, FICO Blaze Advisor business rules management system. FICO Blaze Advisor provides a single decision engine for Nationwide’s risk decisions, replacing the disparate systems previously used in its mortgage and personal loans operations, and enabling Nationwide to treat each customer more consistently. FICO has worked with Nationwide since 2011 to build a number of other technical components and integration layers for its Strategic Risk Infrastructure.

One important way the SRI helps Nationwide extend more credit is by enabling the approval of qualified applicants who would otherwise be declined for affordability reasons. If a customer applies for a loan whose regular payments they may not be able to afford, FICO Blaze Advisor can review the affordability of the loan spread over a longer term, and if appropriate present that option to the applicant. Nationwide estimates this functionality will help it issue £25 million worth of additional loans per year.

The SRI has increased Nationwide’s speed to market with new offers. FICO Blaze Advisor enables Nationwide business users to adjust strategies without waiting in the IT queue. This has enabled Nationwide to respond to regulatory changes more rapidly, as well as to seize new competitive opportunities.

“Changes in pricing strategy that used to take 10 days to deploy can be made the same day now,” said Mark Tuton, senior risk manager at Nationwide. “We have used this capability to remain at the top of ‘best buy’ credit tables published by third parties. When a competitor changed its prices in an attempt to put itself at the top of the table, we reviewed our strategy and made a change the same day to remain at the top. “

The SRI has also made it possible for Nationwide to incorporate new data sources more rapidly into decision making. The SRI pulls data from one internal data mart, with a flexible XML structure that feeds into a customer view, so that new data sources added to the data mart can be pulled into decisions instantly, without IT involvement.

The SRI has eliminated a single-supplier dependency that was hurting Nationwide’s business. Nationwide formerly received credit bureau data from just one credit bureau, and could not issue loans when an applicant did not have a record at that bureau, or when the system was down for maintenance, including during the bureau’s nightly shutdown. The SRI provides true 24/7, multi-bureau capability. Since the launch, Nationwide has issued thousands of loans worth millions of pounds from applications made at night, when bureau data was previously unavailable.

The SRI has improved use of internal customer data, creating a single view of the customer. Nationwide will use the SRI to pre-assess customers for products using business rules applied to their internal data. By encouraging customers to apply for products for which they are already risk-appropriate, Nationwide can simultaneously improve customer service and revenues.

In addition, by leveraging internal data and batch credit bureau data to pre-assess customers for credit offers, Nationwide can avoid purchasing multiple credit bureau reports when customers who respond to these offers apply for credit. This saves money, as previously each request by a customer for a “soft quote” would trigger another purchase of bureau data, and some customers would perform dozens of soft quotes on a single loan request. Nationwide projects that this change alone could save more than £2 million over five years.

The SRI has also streamlined the sales process, reducing the number of questions asked during the application process by focusing on those with the greatest relationship to an applicant’s creditworthiness. This has reduced the consumer abandonment rate during the application process by approximately 17%.

“Nationwide is building a future-proof system that has already generated millions of pounds in benefits,” said Andy Jackson, head of Unsecured Credit Risk at Nationwide. “The SRI has shown great results for personal loan and mortgage originations. We expect it to provide even greater rewards once it is rolled out across the rest of our consumer lending operations.”