Revolutionizing lending in today's digital world
Transcript of Revolutionizing lending in today's digital world
Revolutionizing lending in today’s digital world
March 23, 2017
About our speakers:
Laura DeSoto Senior Vice President, Experian
Steve Smith CEO, Finicity
Reshma Peck Moderator, Experian
1. Today’s lending landscape
2. The role of account aggregation
3. Industry use cases
4. A look at Experian’s Digital Transaction Solutions
5. Q&A
Agenda
• Understand the opportunity to reimagine lending
• Learn how to apply it to various industries
• Discover the power of Experian’s Digital Transaction Solutions
Objective
Partnering to provide innovative solutions
User-permissioned
Access to Data
Robust Analysis
and Insights Integrated
Decisioning and
Delivery
Better Customer
Experience
&
More Efficient
Business Processes
Experian and Finicity Partnership
+ + =
Today’s lending landscape
Trends defining the banking industry in 2017 and beyond
“Long term, banks without legacy
overhangs of branch networks and
heavy ties to paper-based processing
will be advantaged, as those assets will
be increasingly less valued.”
SOURCE: http://www.businessinsider.com/these-are-the-top-trends-that-will-define-the-banking-industry-in-2017-2017-2?pt=385758&ct=Sailthru_BI_Newsletters&mt=8&utm_source=Triggermail&utm_medium=email&
utm_campaign=email_article/#1-onerous-carl-compliance-audit-risk-and-legal-costs-abate-1
• Verification is time consuming
• Relying on proof documents
Challenge: Assessing ability to pay
MORTGAGE INCOME
FRAUD RISK
12.5% FROM Q2 2015 TO Q2 2016
SOURCE: CoreLogic 2016 Mortgage Fraud Report September 2016
• Increases risk of fraud
• Drives up operational costs
• Slows down application and funding process
• Burdens consumers
• Negatively impacts customer experience
• Results in higher abandonment rates
With the rise of “mobile financial services” consumer’s expect to be able to complete their financial transactions at the click of a button.
Challenge: Shifting consumer expectations
53% Smartphone owners
using mobile banking
28% Smartphone owners
using mobile payments
SOURCE: Federal Reserve, Consumers and Mobile Financial Services March 2016
94%
58%
56%
65%
42%
33%
Checking balances or transactions
Transferring money between accounts
Receiving an alert
Paying bills
Purchasing remotely
Purchasing in a store
“Let me state the matter as clearly as I can here: We believe consumers should be able to access [their financial] information and give their permission for third-party companies to access this information as well.”
- Richard Cordray, Director, CFPB at Money 20/20, October 2016
Challenge: Regulatory pressure
SOURCE: https://www.consumerfinance.gov/about-us/newsroom/prepared-remarks-cfpb-director-richard-cordray-money-2020/
• Financial Institutions/service providers
must create a hassle-free customer
experience.
• To do this they will need to invest
more heavily in digital capabilities and
in technology that removes paper from
the process.
Lenders are forced to adapt
https://thefinancialbrand.com/63617/digital-banking-strategies-fintech-data-analytics/
“Digitization is driving transformation, rewriting the
model as consumer expectations change”
We need to be connected ... very connected
Legacy Business Model
Risk Management Inertia
Innovation Weary
Increased Margins
Tailored Customer Experiences
Speed of Innovation
Digital Laggards Digital Innovators
Cloud - Mobility - Big Data Digital Divide
The role of Account Aggregation What’s new?
A method that involves compiling information from different accounts.
What is account aggregation?
• Bank accounts, credit card accounts, investment accounts, other consumer or business accounts, into a single place
• FIs and accounts are chosen by the consumer
• Permission is given by the consumer to the aggregator
vs.
Account Aggregation Credit Reporting
• Pulled from a resting database
• May be viewed without consumer’s knowledge
• Data provided by “furnishers”
• Real time data collection
• User permissioned for every access
• Consumer is owner of data
Benefits of Account Aggregation
• Automated, paperless verification process reduces processing times
• Relies on consumer’s permissioning of data and true aggregation technology
• Verification via real-time access into financial systems versus customer provided
paperwork or third-party systems
• Easy-to-use transparent interface for online and mobile experiences
Why our solution is different
• FCRA compliant and delivered by registered and mature CRAs
• Integrated with best in class Decisioning as a Service platform
• Unparalleled data quality with 100% formatted data sources and comes with a Financial Transaction ID
Use Cases
• Lenders require that borrowers income and assets be verified which takes days sometimes weeks
• Current verification process is tedious and time consuming for the borrower
• Borrower intervention increases risk of false documentation and inflated reporting
Mortgage
Verification of Asset Pilot
• Freedom from paper-based processes for validation of assets for first mortgages
• Freedom from representations and warranties
• Greater speed and simplicity, enabling an improved borrower experience
• Lenders often have income threshold stipulations (STIPs) for borrowers with credit scores< 625
• Dealers often required to verify car buyers income to meet lender stipulations (STIPs)
• Consumer overstates or understates income at time of application
• Consumer provides fake or altered paystubs
• Employment verification often required to meet lender stipulations (STIPs)
Automotive
• Lenders require verification of borrowers income which takes times to gather and verify
• Current verification process is tedious and time consuming for the borrower
• Borrower intervention increases risk of false documentation and inflated reporting
Personal loans
Helping organizations across a wide range of industries
Home Loans
Card & Personal Loans
Small Business
Screening
Eliminate paper to move towards
an all-digital mortgage underwriting
process
More precise ability to pay
assessment
Deeper understanding of cash
inflows and outflows
Improved insight into prospective
employees and tenants
Auto Loans Reduced manual verification and
stipulations
New Products • Income Verification
• Asset Verification
• Cash Flow
• Scores and Attributes
Improved Outcomes • Increase consumer satisfaction
• Reduce risk
• Broaden loan availability
• Accelerate loan underwriting
Account Aggregation will power new consumer insights and
digitize the application and lending process
ACCOUNT AGGREGATION API
Auto Loans
Home Loans
Card & Personal Loans Small Business
Screening
Digital
Identity
Employment
Data
DDA
Savings
Credit Accts
Investment
401K
Experian’s Digital Verification Solutions
• Historical transaction data (typically 12-24 months)
• Income report containing attributes:
- Direct deposit income
- Other income
- Average monthly income
- Frequency of income deposits
- Payor
• Verification of account owner
Verification of Income
Verification of Assets • Account balance query across various types:
- Checking (credits and debits)
- Savings/CD’s
- 401K, brokerage account
• Historical transaction data details (typically 90 days)
• Account balance attributes (typically last 90 days)
- Average account balance and trend
- Min and max account balance
• Verification of account owner
Prequalification
Use across the lifecycle of a lending relationship
Underwriting/ Decisioning
Verification Credit Risk
Modeling
Account Review/ Monitoring
Data flow
Multiple
Integration
Options
Checking
Investment
Account
Savings
Re
al-tim
e A
cco
un
t
Ag
gre
ga
tion p
roce
ss Access via Modern
API, NetConnect, or
ATB
Report
ID
Loan
Application Consumer
555-1313
************
****
Jones
What makes us different?
Broad Coverage • 80% certified coverage
• Full spectrum of account types
High Quality Data • 100% formatted data
• Auditable FI Transaction ID’s
Compliant Solutions • Delivered by registered CRA
• Robust security
Reimagining Lending Crosses the credit lifecycle; the uses and benefits are wide-ranging:
Decisioning
Verification
Credit Risk Modeling
Account Review
Prequalification
• Increases consumer satisfaction and loyalty
• Reduces credit and fraud risk • Broadens loan availability • Accelerates loan underwriting • Improves ability to match consumer
to right offer
Q&A
To learn more about Experian’s verification of income and verification of assets solutions: - Reach out to your account executive - Call 1-888-414-1120