Operating in financial services is suddenly even more reliant on having instant digital access to multiple data sources and being able to adjust lending appetite on a daily basis.
In the area of vulnerable customers, for example, this is going to be pretty much indispensable.
Prior to July 31 2023, finance providers will have been leveraging their IT departments to ensure they identify and appropriately treat such customers.
With Lending Metrics’ clients we have been able to dial-in trigger warnings – a vulnerability alert system if you like, that can be fine-tuned over time and informed by real-time transaction data and multiple credit bureau referencing.
It taps a wide range of indicators, for example to highlight prospective borrowers that demonstrate income shock or sudden income changes over time, those with disproportionate gaming or entertainment debits, or those getting benefit payments that could identify physical or mental vulnerabilities.
In addition to generating such alerts, when automated data analytics systems such as ADP are fully harnessed, users can straightforwardly evidence on a case-by-case basis that every reasonable effort has been made to meet the new requirements of the consumer duty.
More importantly, this is going to be the only truly effective way that finance providers can accurately determine whether each lending decision is likely to generate an income for them.
Those unable or unwilling to maximise their utilisation of data are going to find it harder and harder to remain compliant and still make a profit.
David Wylie is commercial director of Lending Metrics
