The need for decisioning tools and processes to be able to drill down into granular detail has never been so critical. With rising customer expectations for always-on services. Competition from a stream of dynamic newcomers to the market driving the need to grow your portfolio through ever-smarter and more inventive lending strategies. And evermore stringent regulations demanding fair and appropriate assessments at all stages of the lending journey.
The lending market is in an unprecedented state of flux, fuelled by disruptions like post-Brexit and post-COVID uncertainty and the rise of crypto currency. Rapidly and permanently altering the way you lend. That means a growing factor in credit decisioning is now being able to understand, react to and predict how people are spending, saving and borrowing.
Irreversible climate of change
The past decade has seen countless political, social and economic factors influencing consumer choices. It’s shaped how we communicate, transact and behave. And as new trends become the norm, the ability to pre-empt, respond to and incorporate these into decisioning is becoming critical to staying competitive.
Organisations must use data and technology to take decisive action in the interests of consumers. They must be assertive, acting responsibly within the limits of their powers while helping partners expand their capabilities. And they need to be adaptive, continually learning and adjusting to keep pace with consumer choices, markets, new services and products. The need for an agile, insightful and rich data-driven decisioning engine has never been more apparent. Lending decisions are no longer based solely on spending and borrowing history. To reduce risk and win business, you have to consider a customer’s suitability to commit to and make repayments. Using the right data source in the best way is key to making accurate and meaningful forecasts based on fact.
In light of this fast-moving and irreversible picture, here’s five reasons you may need to evaluate your decisioning solution:
1. A 360 view of the customer lifecycle
It’s becoming increasingly crucial for lenders to be able to make responsive decisions at every point in the customer lifecycle. Having complete confidence in your lending requires a rich understanding of customer behaviour beyond the traditional crunch points of acquisition and missed payments. Being able to accurately understand eligibility has become increasingly complex – especially considering factors like the furlough scheme, emergency payment holidays and new credit models from emerging lenders like Buy Now, Pay Later providers, which can all skew perception of a customer’s financial vulnerability. And in terms of regulation, we’re seeing lenders having to justify decisions with affordability checks throughout the lifecycle to explain decisions and prove they were made without bias.
2. Decisioning must never be limited by data
Well-reasoned decision making requires the fullest picture. And a lack of data limits the rationale behind them. Data should give businesses the confidence to make decisions that lead to fairer, justifiable outcomes for the customer. Take Experian’s data-agnostic engine and data integration. Lenders can combine new data and attributes with whole-market, bureau and their customer’s own data to make personalised, predictable and accurate evaluations. If your decisioning workflow is powered by best-in-class data and driven by cutting-edge analytics like augmented artificial intelligence (AI) and machine learning (ML), you’ll be able to identify new and effective cross- and up-sell opportunities.
3. A competitive need for swift, simple decisioning
Lenders are under increasing pressure to make almost-instant decisions. This is being driven first by customers, who are increasingly tech-savvy and expect seamless, omni-channel, digital self-serve experiences that crunch all available data into immediate decisions. In fact, lenders are now competing as much on the ease of their application processes as the appeal of their products, with some customers settling for lesser deals in favour of a quicker turnaround. Ensuring your decisioning tool can compete in this space – without compromising confidence, product integrity and due diligence – can lead to new acquisitions instead of losing out to more agile competitors. The other threat comes from the raft of new lenders, who can build custom credit packages faster through a mobile, cloud-based infrastructure. To remain competitive, traditional lenders need to pair their expertise with slicker processing and operate from a single system for a more seamless solution with less friction and drop-out.
4. Insight without costly or disruptive IT overhaul
If you’re sticking by your tried-and-tested decisioning workflow for fear of the cost or disruption of upgrading to a smarter, automated set-up, have you considered a cloud-based engine? This remote platform offers scalability, interoperability with your present data and set-up and faster deployment. Instantly access new, richer, more relevant datasets with greater stability and security – no installation or extra expense. No longer are the biggest decisioning capabilities the reserve of those lenders with the grandest set-ups and the largest budgets. At Experian, we’re continuously investing in innovation to make our world-leading data, analytics and machine learning more agile, accessible and affordable for all. So rather than ploughing your profit into a static platform requiring hardware refreshes, software updates and manual installation of new datasets, cloud-delivered services add long-term value to your business as you expand and customise your platform. You can simply plug in additional datasets or analytic tools and add features to adapt to evolving client needs while leaving the core architecture intact. On-demand decisioning is accessed from anywhere, and from multiple devices. Speed to market is increased by the ability to build and execute digital journeys or tweak decision strategies. Costs are reduced through no or low IT set-up costs, and reduced operational overheads mean you can focus on the customer experience rather than the infrastructure. And your customers can configure the platform as and when they want – for complete control and flexibility without waiting for technical support.
5. Robust scenario modelling to find new, stronger opportunities
Once confident your decisioning system is equipped and adaptable enough to fully inform your lending, you need to consider its ability to find new opportunities. Despite the economic uncertainties we will continue to face, being able to monitor and test throughout the credit lifecycle is crucial to manage risk and exposure while evaluating new opportunities and meeting the rigours of regulation. Experian’s cloud-based, website-driven decisioning platform helps you understand which parts of your portfolio are likely to be impacted by certain events. This, paired with robust what-if scenarios, help you model the outcome of alternative realities without playing them out live. You can also drill down to discover stronger customer segments you can lend to more confidently and avoid others that present greater future risk.
Is your decisioning engine still up to the job?
When it comes to making robust and insightful lending decisions in unpredictable economic conditions, it’s more important today than ever that your decisioning platform can channel uncertainties into intelligible, augmented decisions on your clients’ fluid financial circumstances. Driven by our £100 million investment in data, analytics and technology and with 30 years’ serving 900 clients in 82 countries, with Experian, you can make confident lending decisions with reduced risk, while maximising growth across your portfolio.
As a long-term partner to some of today’s most agile, ambitious and adaptable lenders, we continue to support businesses, not just by creating decisioning models and strategies for today, but ensuring they will perform over time with frequent checks and measures against the market’s new norms. Cloud-hosted technologies let you continually monitor and benchmark on a dedicated website, helping to control change, optimise risk management and identify new opportunities, both from new prospects and by re-examining your portfolio. If you’re wondering how your decisioning set-up measures up, invest some time reviewing your processes and performance. And then speak to Experian to check if there’s any more you can do.