Supporting Affordability and Vulnerability in the Credit Lifecyle


Written by Ian Barrell

Published October 2019

In this article...

For both consumers and businesses, data is today’s most valuable commodity. It grants us access to personalised, connected services and enables us to participate in the digital economy.

For businesses, data is critical for making smart, strategic investments and keeping services aligned to consumer needs. Yet, data is a complex beast and needs careful management. In consumer credit, this is no different. In June this year, the UK’s Financial Conduct Authority launched a consultation into the workings of the credit information market, amid concerns that some consumers may not be getting a fair evaluation when applying for loans and credit cards.

Part of the motivation for the enquiry is an industry-wide transition in how credit candidates are scored. In the past, the credit decision was measured against a consumer’s history on the basis that the past could predict the future. Over the past 10 years, affordability has come to the fore with businesses assessing a customer’s financial stability and whether they can afford the long-term repayments. Now, however, decisions must also take on board candidate vulnerability and this poses a different challenge. Affordability can be scored against factors such as bank statements, employment history and spending history. Vulnerability on the other hand, requires greater detail and insight into the customer. In some areas of the customer lifecycle, such factors are being taken into consideration to ensure customers are treated fairly – notably in the area of debt management and an increasing awareness of how mental health can impact this.   

Clearly, it’s never been more important for businesses to have the capabilities to securely and accurately collect customer data and make a smart, informed decision – whilst at the same time ensuring they are treating the customer fairly.

Following best practice

With the FCA investigating the purpose, quality and accessibility of credit information, it could pose a headache for those in financial services if they’re operating with legacy systems and infrastructure. To avoid potential ramifications, it’s crucial that businesses remain compliant and closely manage their customer data, however this is becoming easier to do with the latest advancements in technology.

As a form of best practice, more and more credit agencies are looking towards data agnostic companies as a way to remove the hassle of keeping compliant and performing accurate risk assessments. From the initial onboarding process to Know-Your-Customer checks and customer management, the technology exists that allows businesses to integrate into one platform to gain access to multiple third party data vendors to handle the entire customer credit journey. This can help streamline costs and allow businesses to scale services as needed as they no longer have to maintain multiple integrations.

Moreover, by partnering with companies that specialise in vertical markets and truly understand the data journey, businesses can onboard a trusted advisor who has insight into industry regulation, trends and protocol, and ensure that the business remains compliant while improving the end-user journey.

Leveraging excellence

Switching to modern technology platforms has multiple benefits and can better help credit reference agencies provide a holistic view, inclusive of affordability and vulnerability checks.

These platforms can build acceptance rules to suit specific scenarios, whether that’s simple checklists or complex strategies. Rules can be set that meet any risk appetite at any particular time, and ensure a much better customer experience, with the consumer experiencing a seamless, friction-free journey as they go through the acceptance process. For many forward-thinking organisations that are relying on data and insight to make the best-informed decision they can, this is a powerful approach, both in terms of customer onboarding – ensuring genuine customers aren’t being declined – and for longer-term retention as customers form a positive impression of a business.

Of course, successful decision-making relies on having the right intelligence in the first place, which only heightens the need for businesses to ensure they can access multiple data sources when creating bespoke rules. Given the different requirements of customer on-boarding for businesses operating in specific markets or countries, having access to thousands of unique data points allows them to streamline their internal processes and adhere to the latest compliance regulations all whilst delivering a better customer experience.

Actionable Intelligence

As the market continues to build vulnerability measures into the process, businesses need to have the solutions at their disposal which are not only capable of managing complex applications, but do not rebuff legitimate customers. Working with specialist companies such as Pay360, allows businesses to navigate the technology challenge to offer a compliant, robust service that can be tailored to different risk assessment needs across multiple markets.

To find out more about how Pay360’s financial solutions can work for you, you can read about all our products, including Optimize, and speak to an expert here.

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