Humanizing the Digital Experience

Lenders Tap The Brakes

Apr 1, 2020 4:34:22 PM / by Jack Alton

There is no question, the current economic conditions are uncharted waters for most businesses today, including online lenders. It is ironic that as thousands of households are tightening their belts and looking to unsecured loans as a way to bridge the financial gap, that online lenders are being much more selective in whom they extend credit.

Marketing efforts by most lenders have all but halted, the volume gauge of new applicants being approved and funded has been turned down to a trickle, and the industry has tightened lending standards to avoid unwanted and unforeseeable risk.

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It really shouldn’t come as a surprise that online lenders and FIs are putting on the brakes to reduce exposure to risk during the current coronavirus pandemic. However, as a recent article in The Wall Street Journal pointed out, this comes at the exact time consumers and small businesses are pushing demand for much-needed loans, amid financial peril.

“Lenders have zero idea how to assess risk in this environment. There is no model that can predict today if I lend $1, will I get paid back?”

– Jared Hecht, CEO, Fundera

The Problem? Visibility.

I respectfully disagree with Mr. Hecht’s statement. But, how can lenders maintain volume and good decisioning during the pandemic, amidst increasing risk? Visibility into the true intentions of each applicant. More specifically, visibility into two areas of the application that will help expose fraud and risk.

First, is the applicant who they say they are? Cybercriminals are very smart. They have sophisticated tools and access to compromised and synthetic data that can make them appear as someone else.

Second, is the income information on the application accurate and current? Income stability today could be quite different from months ago, so this is another area that provides real insight, through the applicant’s behavior.

In most cases, FI’s rely on historical and stagnant data to make decisions on the fraud, risk, and credit worthiness of an applicant. That could leave a large hole in the process when the current, real-time behavior of an applicant is absent in the decision-making process.

Neuro-ID’s Friction Index® is a behavioral dashboard that allows FI’s to see aggregate and individual fraud and risk behavior in real-time. This new behavioral layer of data brings to light the fraud and risk associated with the applicant, today…not what they have done in the past.

Neuro-ID’s behavior signal helps bolster existing decisioning engines with critical visibility to help close the gap of risk and fraud, allowing FI’s to treat customers in a more personal, risk-appropriate way. Click here to schedule a demo.

 

Tags: analytics, friction index, measuring CX, coronavirus, fraud, online lending, risk, small business loans

Jack Alton

Written by Jack Alton