Exploring the Topography: Using Alternative Data Across the Credit Lifecycle Let’s look at how alternative data can bring value across the customer credit lifecycle: 1. Onboarding/identity verification Alternative data can be used in the onboarding process to simplify the customer experience and create a more suitable offer that is not solely dependent on a credit report. On top of that, alternative data plays a key role in fraud mitigation. The UK alone saw a 66% rise in fraud 2 during 2020. Alternative data sources, such as an email address, phone ownership, photos, and more can be used to verify identity, and in turn, prevent fraud. It is reported that online lenders can improve their fraud detection rates by up to 92% 3 at submission, allowing lenders to cut fraud losses. 2. Underwriting/decisioning Incorporating alternative data points into a credit risk model can help bolster the underwriting process and enable stronger decisioning where you aren’t limited in how you determine risk. Accuracy improves, and alternative data supports more precise pricing strategies. You’ll be able to drive portfolio improvement from two angles – reduced defaults and more competitive products. In fact, alternative data delivers superior modeling results. Credit risk models more accurately score 90% of applicants who would have returned a no hit or thin-file response using only traditional data. 4
Made with FlippingBook Digital Publishing Software