What lenders can learn from last year’s business success stories
2020 was a year of upheaval – and for business, that has brought both challenges and opportunities.
Regardless of size, business success has been connected to adaptability, the capacity to leverage data, and digital tools to make faster, better decisions and boost efficiency. Energy retailer Electric Kiwi, for example, has gone from strength to strength off the back of a business already built around digital technology – and it’s not the only one. Similarly, Laybuy’s inherently digital business had a great 2020, listing on the AUX in September.
Here we look into the three factors that have driven such successes during the COVID crisis, and what larger lenders can learn to survive in the short term and thrive into the future.
Use multi-sourced data to optimise lending decisions
Knowledge is power – and never more so than now. Digital businesses have easy, streamlined access to multi-sourced data, so their decisions aren’t just better informed, they’re faster too. Lenders who can say the same have a distinct edge – they can spot (and say yes to) the good deals faster, and therefore win more of the right kind of business.
That’s what Comprehensive Credit Reporting is designed to deliver, with more than 60 participating companies. The dataset is growing all the time and offers the chance to access key risk data over and above the standard credit reporting information. This facilitates better-informed lending and collection decisions and helps consumers manage their debts and repayments. To access this data, businesses must contribute their own customer information, helping to strengthen the overall data set.
Data, with information pulled from multiple touchpoints, will help deliver the foundation for the analytics you need to keep your portfolio in good health.
Use digital tools to track your competitors and declined customers
The risks and rewards of each deal are changing week to week, so your lending policies and your risk appetite need to as well. The more data you have, the easier this will be.
Our Declined Opportunity Analysis report, another data-driven digital tool, lets you understand what happened to the applications you declined – did they apply elsewhere immediately before or after they applied with you? What was the outcome of those applications, and if they were approved, how did they perform?
We then make recommendations to your current policies to help you say ‘YES’ to more of the right customers, so they don’t end up with another lender.
Manage a healthy portfolio – know your customer
You know that a healthy portfolio means knowing who you’re lending to – and the risks involved in the deal.
Using data-modelling gives you insight into an applicant’s full financial picture, lets you be proactive about supporting customers at risk and get to the front of the payment queue by spotting impending defaults early.
The Centrix Portfolio Healthcheck makes this easier. It compares your portfolio performance against a wide range of key indicators pulled from datasets across multiple industries, including telecommunications and utilities, traditional banking and finance. You’ll get a broad picture of your portfolio’s performance and risk status in a clear and simple view. You’ll also see a top-line view of your portfolio – segment customers, follow trends in improvement or decline and drill down by criteria like region or age. With informative graphs automatically produced, the health check reporting can be used in your business reporting.
Included in the reports is our alert system, an extremely useful indicator triggered by significant events like missed payments, deteriorating risk scores or hardship indicators. This allows you to take immediate action and apply different strategies depending on the type of trigger event. The service is configurable, so you’re alerted only for actionable events.
Let’s get digital
You can turn your business challenges into opportunities – using multi-sourced data for faster, better decisions with our data analytics suite, and staying flexible and adapting your lending policies with our Declined Opportunity Analysis. This, plus ensuring you keep your portfolio in good health with our Portfolio Healthcheck, means you’re equipped to better manage and optimise lending in 2021.
Talk to us about how Centrix can help support you in growth this year.