GDS Link Proposes Remedy for Forthcoming UDAP Changes

The proposed Unfair Deceptive Acts and Practices Legislation (UDAP), in its current form, will have a significant impact on the way credit card issuers manage the risk of their existing and future card portfolios. A key aspect of the proposed regulations will impact an issuer's ability to re-price new and existing balances thereby reducing their portfolio yield and associated profitability. With reduced flexibility on the back-end, the need to strengthen risk management practices on the front-end will be even more critical as the card industry moves forward.

Legacy loan origination systems currently deployed at many financial service organizations do not provide the flexibility to easily implement new credit scoring that may be required to facilitate enhanced risk management policies necessary to offset reduced pricing flexibility once an account is booked. In addition, with the introduction of a wide range of new data sources over the past several years, reliance solely on the three traditional credit  bureaus may not provide lenders with a complete view on a consumer's capacity to pay. Enhanced front-end lending models, should, at a minimum, include testing of alternative data sources to see if this unique information can add lift to new scoring models.

DataView360™ by GDS Link, (www.gdslink.com) was designed to provide financial service organizations with a flexible tool kit which allows for easy integration with any third party or internal data source, the ability to easily develop custom data attributes and the rapid implementation of in house developed or third party custom scorecard models. In addition, DataView360 supports complex process flows, unlimited champion challenge strategies and risk policies based on portfolio segmentation, product type and other key market drivers.

A robust internal facility for performing retrospective analysis of business rules objects and strategies is also supported allowing your risk management staff to test models and new risk policies prior to deployment. From within DataView360, you can simply invoke the Retro-Scoring engine and recall archived credit bureau, application and/or internal system data for testing alternative business scenarios. The Retro-Scoring engine gives an organization the ability to validate new rules objects,credit bureau attributes and custom scorecards using real transactional data, but free of consequence in a non-production setting.

*****   Enhancethe Value of Your Existing Technology Investment  *****

GDS's DataView360™ was developed with the recognition that financial service organizations have made large investments in their existing lending platforms and the effort to replace these solutions would be very labor intensive and quite expensive. DataView360 was designed to be a "bolt-on" to your existing lending platform providing your organization with all the feature richness of our solution while at the same time increasing the return on investment of your legacy solutions.

These are times that try bank balance sheets - and test their credit scoring abilities. But adapting to new economic realities can be difficult if the scoring formulas are hard-wired into a legacy database system.

To make it easier, faster and cheaper to create custom scorecards, Dallas-based GDS Link, LLC has come out with DataView360, which uses Web services instead of traditional software, deploys quickly - and costs as little as a tenth of traditional scorecard systems.

According to a GDS Link survey of 100 banks conducted in May and June of 2008, 71 percent used reports from the bureaus instead of doing their own custom scoring - but only 22 percent of the banks were satisfied with these generic scores.

DataView360 takes just a couple of weeks to configure and a couple of days to install-rather than the six to twelve months of traditional deployments, says GDS president and founder Paul Greenwood. And further changes take place within the system's easy-to-use interface.

"It changes the dynamics of what was traditionally a very hard process to do-custom scoring," says Greenwood. "You no longer have to rely on your IT group. The business analyst or credit risk manager is able to control this with his desktop."

That's been the experience of Craig Johnson, director of portfolio management of Sioux Falls-based Meta Payment Systems, a division of Iowa's MetaBank.

"As a matter of fact, the person at Meta who controls that is myself," he says. "I can go in and change the score cutoffs. It's very simple to do - it takes no programming experience at all."

Meta configured the system to combine the results of two different custom score cards, he says. Now he can go in and, for each combination of scores from the two scorecards, change the approval decision, the credit line granted, and the cutoff points for the two scores.

The company, which previously focused primarily on prepaid cards, plans to use this for a new program for small-balance personal loans. Meta expects to see hundreds of thousands of applications come in over the course of a couple of months, according to Johnson.

Other vendors in this space are also moving toward Web services, says TowerGroup analyst Bobbie Britting, but not everyone is there yet. "It's a mixed bag," she says.

But there's nothing at all wrong with a credit scoring technology that's better, faster, and cheaper.

"What lenders need to be able to do is condense the data acquisition and analysis process and timeframes, finding shifting patterns in consumer behavior and create new custom scores," Britting says.

Link to article:

http://www.americanbanker.com/btn_article.html?id=20081028WZAPHLDH

DataView360™ Revolutionizes the Implementation of Custom Scoring Models

Scoring Solutions in conjunction with GDS Link, introduced their product Score360TM, a state-of-the-art attribute interface which includes 1,000 tri-bureau credit attributes. "Using DataView360 to enable the use of our attributes with our client's, accelerates their implementation, which reduces integration and development costs and allows our clients to recognize their return on investment in weeks not months." Fran Lyons, a Principal of Scoring Solutions.

Please see attached document.