National Bureau of Credit Histories (NBKI), the premier credit bureau in Russia, and FICO (NYSE:FICO), the leading provider of analytics and decision management technology, today announced the immediate availability to Russian lenders of the FICO® Application Fraud Score from NBKI. This breakthrough score is the first for the Russian market that detects fraudulent credit applications, giving Russian lenders the ability to stop fraud at the earliest possible moment and before an account is even booked.
The growth in the Russian credit market has been matched by growth in credit fraud. For example, as shown in FICO’s Fraud Map of Europe, credit card fraud in Russia more than tripled between 2006 and 2011. Much credit fraud ends up as bad debt, and may enter the collections queue, where lenders will struggle in vain to collect. While many lenders have focused primarily on stopping transaction fraud on credit accounts already booked, the leading lenders are looking for a way to prevent fraud even earlier in the process by identifying fraudulent attempts to obtain credit. The new score examines credit application data as well as credit history data at NBKI to rank the probability that the application involves first-party fraud, where the customer has no intention of making repayments.
“By purchasing the FICO Application Fraud Score through NBKI when pulling a credit report, lenders will get a quick snapshot of fraud risk,” said Alexander Vikulin, CEO of NBKI. “This early warning will enable a lender to perform additional verification on the application if warranted prior to booking the account and releasing the funds, thereby potentially avoiding losses on the account.”
In addition, the use of the FICO® Application Fraud Score through NBKI will enable lenders to focus their fraud investigation on new accounts that are most likely to be fraudulent, thereby increasing the efficiency of their resources.
“The retail lending market in Russia continues to demonstrate dynamic growth,” said Alexey Levchenko, chief executive officer of Renaissance Credit. “In parallel with this growth, systems to assess borrower quality are being developed, and needs arise for improved tools, particularly to counteract fraud by potential customers. The use of scoring to protect against credit fraud will allow financial institutions to build loan portfolios of a higher quality. With the FICO Application Fraud Score at NBKI, banks will be able to combat fraud successfully at the loan application stage. This will have a positive impact for scrupulous borrowers, to whom lenders will be able to offer the most favorable terms, owing to the reduced cost of risk.”
“We have been developing credit scoring models for the Russian market for 10 years, and have been building fraud models worldwide since 1992,” said Jim Wehmann, executive vice president of Scores for FICO. “Applying our deep domain expertise to NBKI’s robust data, we produced a reliable FICO Application Fraud Score custom-built for the Russian market. This score is the latest product of the partnership between FICO and NBKI that’s focused on addressing Russian lenders’ most urgent challenges through innovation.”
“More than half the top Russian banks use FICO Scores delivered by NBKI, which now delivers over a million FICO Scores a month,” said Eugene Shtemanetyan, who directs FICO’s operations in Russia. “Russian lenders are demanding the most sophisticated analytic solutions to help them grow their credit portfolios responsibly. In partnership with NBKI, we are helping these lenders expand while keeping risk low — in fact, the FICO Credit Health Index, based on NBKI data on credit delinquencies, has improved by 10 percent since October 2009.”
FICO’s industry-leading enterprise fraud management solutions include FICO® Falcon® Fraud Manager, which protects 2.5 billion payment cards worldwide. As part of its focus on applying analytic innovations to fraud detection, the company has just released FICO® Application Fraud Manager, a new global solution for identifying first-party and third-party fraud in credit applications.
National Bureau of Credit Histories, OJSC, was established by leading Russian banks and is known as a leader in the Russian credit information market. NBKI is significantly more successful than all other Russian credit bureaus with the largest number of partner banks and the largest number of credit reports issued. NBKI also has the highest hit-rate for Russian bureaus with over 60% of reports returned with a history. One-third of all Russian credit histories are stored at NBKI. Learn more about NBKI at www.nbki.ru.
FICO (NYSE:FICO), formerly known as Fair Isaac, delivers superior predictive analytics solutions that drive smarter decisions. The company’s groundbreaking use of mathematics to predict consumer behavior has transformed entire industries and revolutionized the way risk is managed and products are marketed. FICO’s innovative solutions include the industry-leading solutions for measuring credit risk, managing credit accounts, identifying and minimizing the impact of fraud, and customizing consumer offers with pinpoint accuracy. Most of the world’s top banks, as well as leading insurers, retailers, pharmaceutical companies and government agencies, rely on FICO solutions to accelerate growth, control risk, boost profits and meet regulatory and competitive demands. Learn more at www.fico.com. FICO: Make every decision count™.
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