The Credit Risk Lab was launched earlier today during the Zoot Webinar, "Take Back Control of Credit Risk Management." The solution was designed to give credit risk managers the ability to rapidly respond to changing market and consumer behavior. In a non-production environment, managers are now able to experiment with new credit risk policy strategies to make better credit decisions, faster.

"The concept of the Credit Risk Lab originated when Zoot was approached by a top-five financial institution that had been looking for several years, without success, for a way to deliver the most accurate, predictive scorecards to the marketplace quickly and more efficiently," said Tom Johnson, vice president of product development at Zoot. "The FI wanted to be able to create a new set of unique, predictive credit characteristics without the significant time and cost delays of its current process. The Credit Risk Lab allows FIs to quickly evaluate consumer behavior against new ideas, using their own performance data, and determine whether or not the proposed policy will be effective. This helps financial institutions learn from experience, rather than simply react to their environment."

For many financial institutions, today's volatile market and radical consumer behavior changes have made it impossible to accurately predict defaults and keep credit policy relevant. Traditional processes to develop or refine policy can take from six months to two years. As a result of this lengthy cycle, lenders can't respond quickly and have been forced to tighten policy and decisioning parameters to immediately mitigate some risk. However, lenders recognize pulling back on credit isn't sustainable, and a need within the market for a new process that allows effective policy to be developed more rapidly has emerged.

Zoot's Credit Risk Lab addresses this need by providing lenders the ability to significantly shorten the cycle of making changes to attributes and scorecards to determine what is most predictive in the current environment. Business users have complete control over the entire cycle of developing an idea, coding attributes in the tool, running the attribute tests and evaluating the results. The solution has an intuitive interface allowing users to experiment with unlimited variations of attribute definitions to evaluate which will be the most effective (this can all be accomplished without IT/programmer involvement). Using the data from that analysis, credit risk managers can then identify a new strategy in less than 48 hours.

"The first financial institution to implement Zoot's Credit Risk Lab projects savings of more than $2 million in the first 12 months following deployment," said James A. Franklin, chief sales officer for Zoot. "There is a high demand within our prospect and client base for a solution that addresses market volatility in a timely way. This solution brings increased operational efficiency, consistency in credit risk policy across all lines of business and the ability to quickly address changing market conditions."