I. Introduction (135)
Many consumers utilize credit facilities offered by banks to meet their needs. “Credit approval is the process a business or an individual undergoes to become eligible for a loan or pay for goods and services over an extended period of time” (Leotta, 2011). Banks use various techniques to screen applicants before they allow them to utilize their credit facilities. The tools and techniques used to screen applicants constitute a significant risk to the banks. If they are faulty, then, businesses and individuals who are not creditworthy may receive the nod to utilize credit. This is the source of major problems for banks characterized by bad debt, default payment, and high cost of litigation. Information technology has the capacity to enhance the process of credit approval to reduce the risks associated with provision of credit.
II. Analysis of credit approval problems in banks (550)
[This shows that there is a strong drive towards computerization of the credit approval process. Credit approval has its basis on trust, which a computer cannot measure. In fact, computerized systems rely on ratios and other documented patterns such as default rate on past loans, aiming at establishing a credible credit history.]
[Banks, through the credit rating agencies, do not have any information relating to parking tickets, criminal record, child support information, previously declined applications, defaults and missed payments that are more than six years old.]
[One problem with credit approvals is what Lewis (2010) calls “the rejection spiral”. Here, an applicant gets a series of rejection on credit applications and after a few of them, the rest of the institutions simply reject the application based on rejection ...
... middle of paper ...
...Oxford: Wiley-Blackwell.
Kelly, J., Morledge, R., & Wilkinson, S., 2002. Best value in construction. Oxford: Wiley-Blackwell.
Morledege, R., Smith, A., & Kashiwagi D. T., 2006. Building procurement. Oxford: Wiley-Blackwell.
PwC, 2010. Services and solutions risk management. Delaware: PricewaterhouseCoopers International. Available at: http://www.pwc.com/gx/en/engineering-construction/risk-management [Accessed on 14 Dec 2010].
Sowell, T., 2010. The Housing boom and burst. New York: Basic Books.
Stevens, M., 2002. Project management pathways. Buckinghamshire: APM Publishing Limited.
Thompson, P., & Perry, J. G., 1992. Engineering construction risks: a guide to project risk analysis and assessment implications for project clients and project managers. London: Thomas Telford.
Winch, G. M., 2010. Managing construction projects. Chichester: John Wiley and Sons.
Through the use of statistics, expert testimony, appeals to emotions, and a few comparisons, Scurlock tries to convey his message, saying that because the lending industry’s main concern is maximizing profits, they have made it impossible to not have a credit card and avoid being taken advantage of. He accomplishes his goal of clearly relaying his argument to the audience with the high amount of credible support he provides.
CFPB activities on credit cards arise concerning, first, the CFPB CEO made them “more difficult to use.” Once an individual becomes a client of CFPB the alternative access to “hard cash” becomes fairly possible. As banks are already expensive for the customers of CFPB due to their profit margins, the other “illegal loan sources” become even more unreachable (Murray, 2017). So, certain monopolizing tendencies can be traced.
For example in Japan, when the clients send the credits proposal, one of crew in the commercial bank will come to the client’s home as the guess and not showing the real identity or they might used different legal identity, in order to search the information of the client and looking for the truth of the data that have been send to the bank as the credits proposal. If all of the data is true, the banks will considered whether the proposal accepted or rejected, and if the data is not true, automaticaly the credit proposal will rejected by the banks. (Japan, 2016)
Capital One uses IT through its information-based strategy (IBS) to “record, organize, and analyze data on the characteristics and behaviors of their customers,” as stated by CEO Richard Fairbank. Their philosophy was to exploit information by constructing scientific models that could be used to both assess the creditworthiness of potential cardholders through FICO scoring, and to customize product offerings for existing ones. This was done through data mining, sorting, customizing offers and marketing campaigns, and then analyzing this data to see what campaigns worked – for what reason and what it returned in revenue and profit generation. This differs from other financial institutions in that these other institutions were compiling data manually, accepting applicants based upon debt-income ratios and were all charging the same interest rate and annual fee.
García, J. A. X. E., Zeldin, C., & Lardner, J. (2010). The Credit Card Industry Burdens Borrowers with Unfair Interest Rates and Hidden Fees. In J. Tardiff (Ed.), Current Controversies. Consumer Debt. Detroit: Greenhaven Press. (Reprinted from Gotcha!, Up To Our Eyeballs: How Shady Lenders and Failed Economic Policies Are Drowning Americans in Debt, pp. 37-53, 2008, New York, NY: The New Press) Retrieved from http://ic.galegroup.com.rproxy.iwcc.edu
...rder to better protect consumers. I learned that in Europe, there is a technology that supports greater cardholder verification, and there has been a great decrease in the number of people affected by financial fraud. I think that advanced technology like this should be more widely used in order to make credit card use more secure.
Melzer, B. T. (2011) The real cost of credit access: Evidence from the payday lending market. The Quarterly Journal of Economics.
Mullard, M. (2012). The Credit Rating Agencies and Their Contribution to the Financial Crisis. The Political Quarterly, 83, 77-95
In the fall of 1998, the rampant rise in electronic credit card fraud led congress to pass the Identity Theft and Assumption Deterrence Act. This act prohibits, “ knowingly transfer[ring] or us[ing], without lawful authority, a means of identification of another p...
Hillson, D, & Simon, P. (2012). Practical project risk management: The ATOM methodology (2nd ed.). Vienna, VA.: Management Concepts.
The implications of these findings are as follows. The works of these academics highlight the important point that there is higher volatility of capital charges for better quality credits (Goodhart & Taylor, 2004). This is because these credits face a steeper risk curve, as the movement within the ratings scale (from one rating to another) is much greater.
Risk Management is the process of identifying, analyzing and responding to risk factors throughout the life of a project and in the best interests of its objectives (Stanleigh, 2015). This paper is focused on the trends and methods of managing risks in a project. It also analyzes different ways of mitigating risks in a project and why risk management is important in an information technology (IT) environment.
The introduction of the credit card first came around while the economy was booming in the early 1950’s. American consumers were in buy mode and the credit card was a genius idea to let people buy now and pay later. At first look this idea seemed great but what looks and sounds great does not always mean that it is going to be great overall. Over the years credit agencies have released thousands of credit cards with several questionable polices and high interest rates. “Any given American family in the present day possesses an average of eight credit cards with about 15,000 dollars of debt”(Canner 8). Many consumers have become addicted to wasteful cyclic consumption and living beyond their income due to the ownership of credit cards. The invention and continued implementation of credit cards into the American economic and social systems appears to be the cause of the struggling economy, the weakened U.S. dollar, the sky rocketing prices of gas and grocery store goods, the all-time highs of American debt, and social deprivation in some regions.
In this competitive world, companies have to deal with various types of risk all the time with there projects. Generally, it affects the budget and schedule of the project. So it is important to keep in mind the risk management strategies while creating an initial project plan.
The first online banking system was created in 1980 in New York, and was adopted by four main banks; Citibank, Chemical, Manufacturers Hanover and Chase Manhattan. The sector needed an innovation in banking systems because of growing consumer demand for service improvements as well as fear of losing market share. In the beginning, online banking was treated at private customers and small companies, to help customers have easier access to their bank accounts, however, now it achieves a global reach through the population. (Cronin 1997) In today’s world, electronic business (E-business) is very important especially for the banking system, plays a fundamental role in online banking (Nasri 2011). A true definition of online banking is difficult, because this system is connecting with different services which are constantly evolving. Access to online banking is possible through the internet, phone or even television. (Daniel, 1999; Mols, 1998). This ‘open system’ is available to the customers twenty four hours a day, seven days a week. This is a multi-level organized system, which helps people pay bills, check credit cards or even arrange mortgages without leave their houses. (Singer 2012)