41st Parameter, a part of Experian, surveyed 250 marketers to understand the relationship between omnichannel retailing, fraud prevention and the holiday shopping season. The findings show that few marketers understand the full benefit of fraud-prevention systems on their activities as 60% of marketers were unsure of the cost of fraud to their organization. The survey also indicated that 40% of marketers said their organization had been targeted by hackers or cybercriminals. Download the Holiday Marketing Fraud Survey: http://snip.ly/JoyF With holiday shopping in full stride, 35% of businesses said they planned to increase their digital spend for the 2014 holiday season. Furthermore, Experian Marketing Services reported that during 2014, 80%t of marketers planned on running cross-channel marketing campaigns. As marketers integrate more channels into their campaigns, new challenges emerge for fraud-risk managers who face continuous pressure to adopt new approaches. Here are three steps to help marketers and risk managers maintain a frictionless experience for customers: Marketers should communicate their plans early to the fraud-risk team, especially if they are planning to target a new or unexpected audience. Making this part of the process will reduce the chances that risk management will stop or inhibit customers. Ensure that marketers understand what the risk-management department is doing with respect to fraud detection. Chances are risk managers are waiting to tell you. Marketers shouldn’t assume that fraud won’t affect their business and talk to their risk-management division to learn how much fraud truly costs their company. Then they can understand what they need to do to make sure that their marketing efforts are not thwarted. “Marketers spend a great deal of time and money bringing in new customers and increasing sales, especially this time of year, and in too many cases, those efforts are negated in the name of fraud prevention,” said David Britton, vice president of industry solutions, 41st Parameter. “Marketers can help an organization’s bottom line by working with their fraud-risk department to prevent bad transactions from occurring while maintaining a seamless customer experience. Reducing fraud is important and protecting the customer experience is a necessity.” Few marketers understand the resulting impact of declined transactions because of suspected fraud and this is even more pronounced among small businesses, with 70% saying they were unsure of fraud’s impact. Fifty percent of mid-sized business marketers and 67% of large-enterprise marketers were unsure of the impact of fraud as well An uncoordinated approach to new customer acquisition can result in lost revenue affecting the entire organization. For example, the industry average for card-not-present declines is 15%. However, one to three percent of those declined transactions turn out to be valid transactions, equating to $1.2 billion in lost revenue annually. Wrongfully declined transactions can be costly as the growth of cross-channel marketing increases and a push towards omnichannel retailing pressures marketers to find new customers. “Many businesses loosen their fraud detection measures during high peak time because they don’t have the tools to review potentially risky orders manually during the higher-volume holiday shopping period,” said Britton. “Criminals look to capitalize on this and exploit these gaps in any way possible, taking an omnifraud approach to maximizing their chances of success. Striking the right balance between sales enablement and fraud prevention is the key to maximizing growth for any business at all times of the year.” Download Experian’s fraud prevention report to learn more about how businesses can address these new marketing challenges.

By: John Robertson Capital is the life-blood of financial institutions and has become more readily scrutinized since the global credit crisis. How one manages their capital is primarily driven by how well one manages their risk. The use of economic capital in measuring profitability enhances risk management efforts by providing a common indicator for risk. It provides pricing metrics such as RAROC (risk adjusted return on capital) and economic value added which include expected and unexpected losses consequently broadening the evaluation of the adequacy of capital in relation to the bank's overall risk profile. The first accounts of economic capital date back to the ancient Phoenicians, who took rudimentary tallies of frequency and severity of illnesses among rural farmers to gain an intuition of expected losses in productivity. These calculations were advanced by correlations with predictions of climate change, political outbreak, and birth rate change. The primary value of economic capital is its application to decision-making and overall risk management. Economic capital is a measure of risk, not of capital held. It represents the amount of money which is needed to secure the survival in a worst case scenario; it is a buffer against expected shocks in market values. Economic capital measures risk using economic realities rather than accounting and regulatory rules, which can be misleading. The concept of economic capital differs from regulatory capital in the sense that regulatory capital is the mandatory capital the regulators require to be maintained while economic capital is the best estimate of required capital that financial institutions use internally to manage their own risk and to allocate the cost of maintaining regulatory capital among different units within the organization. The allocation of economic capital to support credit risk begins with similar inputs to derive expected losses but considers other factors to determine unexpected losses, such as credit concentrations and default correlations among borrowers. Economic capital credit risk modeling measures the incremental risk that a transaction adds to a portfolio rather than the absolute level of risk associated with an individual transaction. In a previous blog I restated a phrase I had heard long ago; “Margins will narrow forever”. How well you manage your capital will help you extend “forever”. Has your institution started using these types of risk measures? The Phoenicians did. Learn more about our credit risk solutions.  

A new comarketing agreement for MainStreet Technologies’ (MST) Loan Loss Analyzer product with Experian Decision Analytics’ Baker Hill Advisor® product will provide the banking industry with a comprehensive, automated loan-management offering. The combined products provide banks greater confidence for loan management and loan-pricing calculations. Experian Decision Analytics Baker Hill Advisor product supports banks’ commercial and small-business loan operations comprehensively, from procuring new loans through collections. MST’s Loan Loss Analyzer streamlines the estimation and documentation of the Allowance for Loan and Lease Losses (ALLL), the bank’s most critical quarterly calculation. The MST product automates the most acute processes required of community bankers in managing their commercial and small-business loan portfolios. Both systems are data-driven, configurable and designed to accommodate existing bank processes. The products already effectively work together for community banks of varying asset sizes, adding efficiencies and accuracy while addressing today’s increasingly complex regulatory requirements. “Experian’s Baker Hill Advisor product-development priorities have always been driven by our user community. Changes in regulatory and accounting requirements have our clients looking for a sophisticated ALLL system. Working with MainStreet, we can refer our clients to an industry-leading ALLL platform,” said John Watts, Experian Decision Analytics director of product management. “The sharing of data between our organizations creates an environment where strategic ALLL calculations are more robust and tactical lending decisions can be made with more confidence. It provides clients a complete service at every point within the organization.” “Bankers, including many using our Loan Loss Analyzer, have used Experian’s Baker Hill® software to manage their commercial loan programs for more than three decades,” said Dalton T. Sirmans, CEO and MST president. “Bankers who choose to implement Experian’s Baker Hill Advisor and the MST Loan Loss Analyzer will be automating their loan management, tracking, reporting and documentation in the most comprehensive, user-friendly and feature-rich manner available.” For more information on MainStreet Technologies, please visit http://www.mainstreet-tech.com/banking For more information on Baker Hill, visit http://ex.pn/BakerHill