Responsible, Reliable and Robust Credit Decisioning

Responsible, Reliable and Robust Credit Decisioning

Lydia Coyle
by Lydia Coyle

There are around 15 million people in the UK struggling to access affordable credit, who are just one unexpected bill or bit of bad luck away from a crisis. High cost credit, especially to those in a vulnerable financial position, is extremely damaging and urgently requires attention and alternative solutions.

Added to this, 5.8 million adults in the UK have no access to formal credit options. They are ‘invisible’ to the mainstream credit economy as they have little or no available credit history or identity information. Their thin credit files prevent them from accessing the financial products they desperately need.

Financial exclusion in today’s society is therefore more prevalent than ever.

The failure to provide reliable alternatives to high cost credit lenders and to continually exclude a large proportion the population from financial products gives rise to huge social costs. The mental and physical health problems related to financial stress are also becoming more and more evident and well documented.

The need to make fairer, faster and more informed credit decisions has never been more pressing.

It came as no surprise therefore that in a survey conducted by Woodhurst, business leaders revealed that digital Credit Decisioning capabilities are one of the key areas requiring vast improvement across the organisation.

To better serve those that consistently struggle to access affordable credit, banks must use smarter data sources, make instant decisions and create flexible products – without increasing risk.

Use smarter data sources

Flexible, customised products

Predict and pre-empt

Harness data to deliver better decisions

Access to a greater variety of alternative data on financial behaviour would allow companies to deliver fairer, more affordable solutions and positive credit decisions. It would also lead to a better customer experience, with lenders able to make more informed, more appropriate decisions. Finally, the ability to analyse and understand more about the true creditworthiness of these individuals would enable companies to generate more business and reach a wider audience with more tailored solutions, without adding risk to their business.

In a world that we hope will be increasingly driven by Open Banking and Open Finance initiatives, companies need to harness intelligent analytical tools and the plethora of data to make better credit decisions to get funds into the hands of the right customers, at the right time.

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