FINANCIAL SERVICES
“ THERE ’ S AN EXPECTATION THAT , AS ECONOMIC GROWTH SLOWS , THERE WILL BE A REDUCTION IN NEW LENDING AND A FOCUS ON THE QUALITY OF EXISTING LENDING ”
PAUL RANDALL CREDITINFO
“ There will be a proportion of customers who inevitably run into trouble in terms of repaying loans , as economic growth slows and purse-strings tighten ,” Creditinfo ’ s Paul Randall continues . “ Meanwhile , lenders are going to want to do everything they can to decrease their risk profiles .”
Embrace open banking to improve credit decisioning Harder economic circumstances will make it imperative for lenders to make reliable credit decisions . With many household budgets under growing pressure , ensuring that borrowers can repay their loans will become more important – and data has a huge role to play .
“ Proper risk management is all about capturing as accurate a picture of a borrower as possible ,” Randall explains . “ The quality of the information used in this process is extremely important .
“ During times of strong economic growth and minimal losses , lenders become more confident about awarding loans . As the economy slows down , the focus should be on performing rigorous checks and building airtight target borrower profiles in order to build holistic and objective overviews that will feed into decreasing potential risk .
“ The other aspect lenders could focus on is continuous , clear communication . Neither borrowers or lenders wish to see customers fall behind with payments , so encouraging lenders to implement an open dialogue with borrowers to discuss their problems is very important , and removing barriers to this open communication is key . For example , banks need to try to make sure that , during times like this , stressed borrowers aren ’ t waiting for long periods of time to speak to someone .”
Tasha Chouhan , UK & IE Banking Lead at Tink , agrees : “ Financial services providers should embrace the use of open banking technology to enable faster and more accurate credit decisions in real-time that work for everyone . Greater access to financial data allows lenders to make better decisions about affordability and creditworthiness , based on up-to-date income and spending information rather than credit scores or antiquated risk decisioning .”
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