Aligning consumer risk with seamless digital CX | So Good News

Throughout the pandemic, digital lending provided an important source of emergency funding for millions of consumers. Now, consumers need to know how to spend their regular and one-time expenses because inflation erodes their purchasing power. Digital lending solutions can help fill the gap caused by irregular payments and inflation, especially as lenders focus on bringing a customer-friendly way to access credit.

In fact, alternative lending has seen significant growth in recent years and is expected to continue to grow. IDology research estimates that 18 million Americans signed up for online personal loan accounts last year. But our report also found that consumers are willing to switch financial services providers—more than 30 million are considering switching providers in the next 12 months.

Although the demand for loans will be greater, lenders must accurately judge the risk of buyers without using too many arguments at this time. According to the 2021 report of the Aite-Novarica Group, only 31% of the lending institutions had an insignificant risk of fraud.

To implement an effective fraud mitigation strategy, lenders need a system that provides flexible ways to verify potential customers. The credit risk assessment tool provides the borrower with a multi-faceted picture and provides a wealth of information to help financial institutions assess the borrower’s risk. Based on flexible workflows, lenders are empowered to verify anyone, anywhere in the customer journey, with minimal information and simple inquiries from consumers.

Transparency in all factors used to assess the borrower’s risk is also important. In short, lenders must understand the criteria used to approve or decline an application. However not all IDV solutions offer high visibility. IDV models that rely on abstract scoring often do not provide information on potential risk/vulnerability indicators relevant to information needed to inform modern decision-making processes.

The BAI suggests that financial institutions should establish “trust through transparency.” Lenders should rethink their risk management strategies. Insights allow financial institutions to gain insight into consumer demographics and digital trends. Transparency also allows lenders to collect the information they want from consumers, reducing disputes and improving consumer confidence.

By analyzing digital information such as IP address, email, phone number (as well as data related to mobile services, such as account status, type and age) and other identifiable information, lenders can identify fraud, incorrect entries and more. problems with identity.

In order to avoid a large conflict, IDV can assess the risk with limited information. For example, by using digital identifiers to qualify prior to customer identification processes, lenders can use the IDV system to predict the risk of loan defaults, first payment defaults or financial defaults.

IDV can also create less traffic by reviewing information that users may be comfortable providing. For example, the service may rely on sensitive data, such as name and phone number. Balancing urgent tasks against the need to mitigate risks means finding the right keys to predict and prevent accidents and fraud. By collecting and analyzing digital information, especially mobile number and email and IP addresses, you will have the ability to better monitor your customers.

When it comes to finding and having a competitive advantage in the alternative lending market, knowledge is power. Lenders can overcome many competitive threats by successfully onboarding approved customers with a safe, conflict-free journey. This means using robust, flexible encryption technology to keep digital information from getting lost.

Technology that can work in the background to create a complete picture of potential customers empowers lenders to make stronger business decisions. Creating a soft touch and minimal friction for consumers enables the scalpel method of data collection. Establishing a robust IDV platform that enables lenders to seamlessly serve today’s customers can also help them confidently create a comprehensive picture of consumers of every generation.

Christina Luttrell is the chief executive officer of GBG Americas, a global leader in multidisciplinary identity verification and fraud prevention.

See how technology can help financial services providers reach the right customers with the right credit products and compete effectively with non-bank players in the BAI Executive Report, “Technology is pushing lending in new ways.”