RedAmberGreen Q4 2022

Red Amber Green

A bumpy ride ahead... Credit referencing, ten years from now A future without loan sharks?

Credit risk and decisioning news

What lies beyond the cost-of-living crisis, and how will it shape the lending landscape of the next decade? Looking to the future

BROUGHT TO YOU BY

Q4 2022

Go to contents page

Customer stories We work with some of the best innovators in the industry. Click on a story to learn more.

Editor's letter

Building societies

Get in touch Call us +44 (0) 2394 211010 Email us info@lendingmetrics.com Visit our website www.lendingmetrics.com

“With the help of the LendingMetrics team, we we have developed a solution that will allow us to focus on the details of the case and arrive at a decision quickly.” Darren Ditchburn, Chief Customer Officer at Darlington Building Society 

Specialist finance

Welcome to your new year's edition of RedAmberGreen It's a new year and a new opportunity to change things up here at LendingMetrics. That means a new name for our quarterly magazine, and a new editor - that's me! Say goodbye to Metrics Monthly and hello to RedAmberGreen!



“We can change things within minutes – it’s brilliant!” Dave Hindle, Chief Executive Officer at Propensio Finance

And looking forward, we share our thoughts on what the credit referencing landscape might look like ten years from now. We've also got exciting news about how ADP is empowering Iceland's Food Club to support those in need, a customer story from a new and innovative lender Tymit, and plenty more news from ourselves and the industry at large. It would be remiss of me not to thank my predecessor, Georgia Pullen, for her long-running tenure as editor. She brought us a raft of engaging articles, often with charming illustrations; I hope to be able to deliver that same quality you've come to expect, while injecting a little of my own particular style. Thanks for reading, and I'll catch you in the next one!

So, what's new? In this issue, given the timeliness of the new year and the tumultuous state of affairs in the UK economy and more specifically, the credit industry, we felt it would be prudent to take a look at where we are now and what we can expect in 2023 and beyond. We take a look at the problem of loan sharks, an insidious phenomena as old as time, but one which seems to have exploded in this cost of living crisis, no doubt compounded by the huge decline of the HCSTC industry. We examine the cost-of-living crisis - the ongoing "economic rollercoaster" - and what it means for both lenders and consumers.

Consumer lending

Add us on Linkedin

“LendingMetrics [is] helping us to quickly and reliably assess customer affordability in line with our strong focus on responsible lending.”

Car finance



Follow us on Twitter

“We’ve had a lot of support from the LendingMetrics team to establish how we can get the most out of ADP and we’re looking forward to getting started with the solution.” Ken Doyle, Head of Credit Risk and Data Strategy at Specialist Motor Finance Ltd



Book a FREE demo

Mortgages

Don't miss an issue! Subscribe to stay up-to- date with RedAmberGreen and receive each quarterly edition direct to your inbox.

“The partnership with LendingMetrics has allowed us to provide a scalable offering, increase our volume capability and improve both broker and consumer journeys, thus delivering more successful outcomes.” Buster Tolfree, Commercial Director of Mortgages at United Trust Bank



Consumer lending

Luke Atkin Digital Marketing Executive

“ADP is second to none for champion/ challenger testing. It has enabled us to confidently propose and execute changes in the knowledge that the objective is achievable.” Leon R Tunnicliff, Global Head of Credit Risk & Fraud at etika



Subscribe today!

View the full collection 

www.lendingmetrics.com

RedAmberGreen | 03

Go to contents page

In this issue

03 Editor's letter 04 In this issue 06 In the news

Read how LendingMetrics’ ADP platform has been integral in the support of Fair For You’s latest initiative with high street retailer Iceland to support financially disadvantaged consumers. 14 ADP supports Iceland's Food Club

15 Custom Credit choose ADP

The latest industry news: a bright future for Open Banking and fintech partnerships, major changes to the financial sector inbound, and retailers and credit card providers at loggerheads over payment fees.

David Wylie shares his thoughts on what the credit risk and referencing landscape will look like ten years from now. 16 The future of credit referencing 14 A next-level borrowing experience for clients.

08

08 The war on loan sharks

Those of us struggling with financial hardship face a multi-pronged attack from payday lenders, individuals with dicey connections and predatory digital apps - what can be done?

18 Customer stories: Tymit

Read how this revolutionary lender accelerated their decisioning while remaining transparent and flexible with ADP.

10 Company updates

Credit Connect has announced its Credit & Collections Technology company power list for 2022, and LendingMetrics has taken the top spot for a second year running.

18 15

12 Hold on tight

10 12

Lenders must adapt to survive in an era of macroeconomic change and shifting markets.

16

04 | RedAmberGreen

Q4 | 2022

www.lendingmetrics.com

RedAmberGreen | 05

Go to contents page

NEWS

In the news

SafetyNet Credit on the brink As we go to press, it has been reported by Sky News that Indigo Michael, owners of SafetyNet Credit and Tappily are lining up insolvency experts. The firm employs roughly 250 and has approximately 15,000 active customers. If confirmed, this will be a further blow to credit excluded consumers who are increasingly being left with no legal borrowing options and are turning to loan sharks (see our article on page 9) . Economists forecast a fall in UK interest rates Following a universal fall in the level at which economists expect rates to peak, many have begun to predict a fall in interest rates. Amongst those voices, the ratings agency Fitch expects further interest rate rises in 2023, but is predicting an easing in Q2 of 2024. Ben Laidler, global markets strategist at social investing network eToro, said: “All are now starting to see the light at the end of the high inflation tunnel as price rises start to peak and fall. This is the crucial first step towards a summit of UK interest rates around 4.25% early in 2023, and the start of rate cuts late in 2023.”

Edinburgh Reforms poised to rewrite the financial sector rulebook

FCA and friends bet big on Open Banking An update on the future of Open Banking, the initiative which enables third-party financial apps and services (such as LendingMetrics' own establish an independent entity which will oversee Open Banking moving forward.

As part of Chancellor of the Exchequer Jeremy Hunt's autumn statement, the UK government's plans to "repeal and replace hundreds of pages of burdensome EU retained laws" across the banking sector were revealed. Dubbed the "Edinburgh Reforms", the sizeable financial services overhaul centres on loosening tight EU restrictions, which could translate to more competitive banking with lower costs. However, detractors argue that the Reforms encourage taking undue risks during a cost-of-living crisis, and do little to benefit consumers. Potential changes on the table include eliminating separation between retail and investment banking, which could

expand banks' consumer offerings but was originally introduced during the 2008 financial crisis to protect said consumers. Executives also stand to benefit, with a review of the Senior Managers regime which holds execs accountable for rule breaking, and the removal of caps on bonuses. The implementation and subsequent impact of these reforms will likely take a long time. While encouraging deregulation and risk-taking against a backdrop of financial hardship is certainly a poor look, the banking landscape is likely to change and shift in the coming years.

Stated priorities for the platform include "unlocking the potential of Open Banking payments" by offering consumers greater choice between payment methods, adopting a model capable of scaling to support future growth, and establishing sustainable ongoing development of the platform. The JROC is expected to share a further update on progress towards these goals in Q1 2023, including a long-term regulatory framework overseen by the CMA.

OpenBankVision platform) to gain greater visibility of customer banking data, has been delivered by the Joint Regulatory Oversight Committee. Established in March 2022, the JROC is a joint venture between the Financial Conduct Authority (FCA), the Competition and Markets Authority (CMA), the Payment Systems Regulator (PSR) and HM Treasury. The JROC's goal is ultimately to realise the full potential of Open Banking as a platform. To achieve this, they intend to

UK retailers feel the card fee crunch Credit card providers are under fire for so-called "price gouging" in the wake of a massive boost to card payment volumes over the past two years.

have risen by an alarming 28% year-on-year. The BRC calls this unsustainable, accusing card firms of "abusing their dominant market position". MasterCard disputes this claim, stating that it provides "one of the lowest cost and safest ways to accept payment". Two market reviews, into card fees and interchange fees respectively, are to be conducted by the PSR. These reviews are expected to take up to two years to conclude; the BRC has called on HM Treasury to carry out its own inquiry in the interim.

The British Retail Consortium has called for emergency intervention from the Payment Systems Regulator to protect UK retailers from rapidly rising transaction and interchange fees. "With the public in and out of lockdown and cash usage discouraged in 2021, over 90% of retail spending used debit or credit card", the BRC says. Transaction costs topped £1.3 billion in 2021, and scheme fees

06 | RedAmberGreen

Q1 | 2023

www.lendingmetrics.com

RedAmberGreen | 07

Go to contents page

COMMENT

tactics to keep debtors paying out – for example, making unsolicited deposits into a borrower’s account, which they demand be paid back with interest. These gangs threaten victims and their families with violence, leaving them trapped in a vicious cycle of repayment while being unable to make ends meet themselves. It's not only face-to-face extortion which plagues those in financial difficulties. Across the Apple App Store and Google Play, more than 300 predatory loan apps have been identified and removed this year. These apps, much like any predatory lender, offer instant loans at extortionate interest rates. The insidious catch is that, with access to sensitive information such as messages, contacts and even photos on the borrower’s device, predatory loan apps are able to blackmail their users. Indeed, digital loan scams have become so endemic in poorer locales like India that they have sadly led to multiple cases of extorted and threatened

victims taking their own lives. So what’s the answer? How can people in crisis be protected from financial ruin and given the support they desperately need? One answer is to reach out to the appropriately named Stop Loan Sharks charity. More than half of victims who contact the organisation have borrowed money to pay for essentials like food or fuel - a stark reminder of the extent of the current climate of rapidly ballooning expenses. The charity encourages anyone affected to get in touch, and for family and friends to keep a close eye out for possible victims. But we must pose the question, where would these loan shark victims be if there was a flourishing and well regulated HCSTC industry? Would they have avoided the criminal gangs altogether? The industry and the regulators need to take note and find a solution so that access to credit for all, is restored.

More people than ever before are classified as financially excluded or ”credit invisible”. While there is no onus on lenders to be more accommodating of such people, it would be prudent to be aware of the lending landscape as it exists today, and the numerous challenges - and risks - faced by those less financially fortunate. “These loan sharks will spot a vulnerability, and they will prey on it. They're not running affordability checks, they don't care if you pay your rent or can put food on the table. They just want to take as much of your money as possible. The only advice I'd give is get help straight away, it's never too late, don't put yourself through it." Cath Williams Stop Loan Sharks

The war on loan sharks Whether it's predatory payday providers or so-called friends with dangerous connections, lenders preying on society's most vulnerable are ever-present

At about the same time as the 2008 financial crisis, the UK witnessed the rapid rise to prominence of so-called “payday loan” providers. Businesses such as Wonga and QuickQuid became notorious for their extremely accessible loans with high interest and in many cases, spiralling fees. Record profits for these companies swiftly translated into record complaints by consumers blindsided by rates as high as 4,000%, and it was clear that regulations were sorely needed to prevent short-term loans ballooning into unaffordable, and in some cases devastating, debts. In January 2015 the Financial Conduct Authority imposed restrictions on the unfettered activities what they called “predatory” lenders.

Daily interest rises were capped, default fees limited and the total amount repayable could not exceed double the amount borrowed. Lenders who had previously taken advantage of “easy money” now found their business model gutted. The result? Unsurprisingly, Wonga reported significant losses within the following two years. It seemed the age of ultra-high-interest instant borrowing was at an end, or at least kept on a very tight leash – and yet, a stark warning followed. Without readily available lending options for those in dire need, borrowers would seek out the only people willing to lend regardless of credit history or financial exclusion; those unsanctioned, unregulated and unburdened by morals. Loan sharks. Fast-forward to 2022, and the prophecy has unfortunately come to pass. The imminent cost-of-living crisis continues

to pile pressure on an already financially strained general public. It’s estimated that 1 in 7 people in the UK are “financially excluded”, preventing them from acquiring loans or other legitimate monetary assistance. Especially around the Christmas period, making ends meet can seem an insurmountable challenge for many. In such dire straits, an offer of short- term financial aid from a neighbour or friend is an invaluable lifeline. Sadly, the old adage applies: if it seems too good to be true, it usually is. A small loan of £50 or £100 between “friends” is happily granted, with the caveat of an exorbitant interest rate. Inability to pay back this extortionate interest leads to further borrowing, which leads to even greater interest – you can see where this is going. In truth, these loan sharks are operating at the behest of criminal gangs. They’re not afraid to resort to cruel and unusual

08 | RedAmberGreen

Q4 | 2022

www.lendingmetrics.com

RedAmberGreen | 09

Go to contents page

NEWS

CASE STUDY

Company updates LendingMetrics tops the Power 20 list for a second year running

Continued success for Castle Trust

Related articles Custom Credit choose ADP

Credit Connect's full awards review, including the complete power list, can be viewed here in PDF format . “The annual guide provides a snapshot of the technology innovators within credit and collections – it showcases who is leading the way with innovations and have backed up their status by entering the awards. Finalists and winners have provided measurable data within this process. The companies that have made the top 20 ‘premier’ list this year are now highlighted by their dedication to innovation. All the companies listed have provided solutions that have helped to enhance the best customer outcome through lending or collections processes.” Colin White Founder, Credit Connect

Credit Connect has announced its Credit & Collections Technology company power list for 2022, and LendingMetrics has ranked in first place for the second year in a row. The annual list sees Credit Connect ranking its top 20 companies in the credit technology sector. The list acknowledges and recognises innovation within the industry. The shortlist is compiled based on winners and nominees in Credit Connect's own Credit & Collections Technology Awards 2021, where LendingMetrics emerged victorious in the Credit Reference & Information Solution category, and was nominated in several other categories. A company's performance across the previous five years' Awards determines their position in the power list. The 2023 list is expected to be published in December and will reflect the results of the 2022 Awards. As LendingMetrics won the Credit Reference & Information Solution award at this event as well, they are likely to remain at the top of the list.

The Sussex-based tailored loan provider partners with LendingMetrics to offer a next-level borrowing experience to their clients.

Read now

Customer stories: Tymit Read how this revolutionary lender accelerated their decisioning while remaining transparent and flexible with ADP, in their mission to provide "smart, flexible and honest” credit.

We sat down with Castle Trust Bank to discuss the positive impact that ADP has had on their business.

Take me there

Since acquiring Omni Capital in 2017, Castle Trust Bank has offered accessible finance solutions to retailers. LendingMetrics' ADP has powered their decisioning process for the past four years. When LendingMetrics initially spoke to Castle Trust in 2018, we learned that their credit strategy was fragmented between themselves and an external partner This fragmentation led to inflexibility; Castle Trust was forced to implement a "one size fits all" approach to credit risk. With a desire to offer customers a more seamless journey, and a need to incorporate a flexible risk strategy which could be tailored to suit the unique needs of brokers or retailers, Castle Trust adopted LendingMetrics' Auto Decision Platform. Since implementing ADP, Castle Trust has doubled its overall lending through Omni Capital. They attribute

this success to multiple factors: the increased flexibility afforded to them by ADP, a greater emphasis on self-serve capability offered to their customers, and a robust suite of customer profiling and intelligence tools enabling a complete customer journey throughout the lifetime of their loan. You can watch our full video case study with Castle Trust Bank on our website . "If we think about the impact the economy has had on customers, we want to actually go through with them on that journey... to understand what the customer profile could look like in the next six to twelve months." Gabriel Falana Head of Product and Change Castle Trust Bank

More stories

Visit LendingMetrics' website to view our ever-expanding gallery of customer stories, including written case studies and engaging video interviews.

Find out more

10 | RedAmberGreen

Q4 | 2022

www.lendingmetrics.com

RedAmberGreen | 11

Go to contents page

COMMENT

Hold on tight

suddenly do not. Who would have expected job tenure at the likes of Meta and Twitter to be so precarious? Such an unsettled backdrop is making lending calculations far more tricky, and this places an emphasis on the need for assessments to be dynamic and reflective of real-time market conditions. In these circumstances, finance providers need to ask themself a key question, the answer to which will determine their viability in the years ahead: “Do I have the ability to analyse market changes week-by-week and adapt my lending swiftly to the new reality?” Having had the conversations I have with lenders over the past few years, I know that most, if they are honest with themselves, will answer ‘no’ to this question. Unbelievably, there are plenty who still use manual underwriting, and there are others hobbled by ‘hard-coded’ decision

engines. Many have both. The obstacles when trying to implement rapidly-changing decision protocols via a manual underwriting team are self- evident and need not be stated here. Regarding hard-coding, it is hopelessly time consuming. Scorecard changes have to join the tedious list of jobs lined up for the IT department or contractor, which can take days or more often weeks. Even then, they are rarely error free, so a testing phase is needed using ad hoc scripts. What chance have you got to introduce timely changes when you’re operating in this environment? Any lender looking to be around for the longer term and make a decent profit needs to be in a position where they can introduce swift changes to their lending regime almost overnight. It looks like we are in the midst of a sustained period of volatility, so this is going to be of massive importance. The

mini-Budget debacle was a foretaste of what can happen when you are slow to adapt. The Chancellor’s ill-fated announcement left a number of high- profile lenders caught like rabbits in the headlights. They were unable to respond to changed market conditions, so had to effectively withdraw temporarily from the market and re-price. Lenders should be able to reflect changes within hours of budgets, US Presidential elections, reversals of war, industry travails, etc. And it is not as if this is a difficult ‘ask’, given that they can already do this with plug-and-play automated decisioning platforms such as our own ADP. The bottom line is that if they don’t employ such technology and fail to flex with macro change, they will be pricing for a ‘no’ when they should be pricing for a ‘yes’, and vice versa.

David Wylie, Commercial Director of LendingMetrics, predicts bumpy times ahead for lenders unable to adapt rapidly to what is becoming constant macroeconomic change. It’s quite sobering to consider how much economic conditions have changed over the past couple of years. It has been a bit like a child’s kaleidoscope - one minute the picture looks one way, the next it is totally different. At the beginning of 2021, inflation was slightly ahead of its 1.4% level of the previous year, interest rates were just 0.25%, and there was no reason to believe anything was going to change dramatically for the worse. Sure, the economy had been hit hard by Covid lockdowns and pundits predicted a gradual uptick in inflation as consumers, released from house

arrest, spent their money again, but it would be a blip rather than anything more serious. And a ‘good’ blip at that, given that the uptick would be down to increased economic activity. Then, in early Spring 2021, came another wave of Covid and national lockdown. The brakes were slammed on again and economic activity stalled, at the same time government spending (borrowing) was supercharged. The UK plateaued through the rest of that year, only for Russia’s invasion of Ukraine to unleash monster inflation at the beginning of 2022. So, from 1.4% inflation, we now have 11.1%, and from a 0.25% Bank Base Rate, we now have one of 3% and rising. You could be forgiven for thinking that we have been, and still are, on an economic rollercoaster. Already we have sight of the next cycle,

with the Bank of England expecting inflation to fall sharply from the middle of 2023, as demand for goods and services falls away and the impact of the energy price cap is felt. This sort of thing is not a pleasant experience for lenders. Such big swings lead to borrower risk profiles markedly changing almost overnight, along with affordability calculations, given the variety of variables at play. What has made matters worse is that at a time when lenders have had to put up interest rates, the cost of everything else has been increasing too. Ordinarily, during times of recession, inflation falls along with interest rates, but this has not been the case in recent months. Regular finance payments have risen sharply along with everything else, while disposable income has been shrinking. Additionally, industries that used to provide vanilla-grade job security

12 | RedAmberGreen

Q4 | 2022 Q1 | 2023

www.lendingmetrics.com

RedAmberGreen | 13

Go to contents page

NEWS

NEWS

ADP helps support Iceland’s Food Club LendingMetrics’ ADP platform has been integral in the support of Fair For You’s latest initiative with high street retailer Iceland.

Custom Credit choose ADP

“‘We are delighted that Fair For You has decided to utilise the best-in-class features of ADP to underpin the onboarding of borrowers for the Iceland Food Club. Our platform gives users unmatchable insight into the finances of prospective borrowers, enabling them to make optimal affordability decisions.”

The Iceland Food Club is a unique scheme designed to help households avoid food poverty and get a better handle on their finances. It builds on affordable finance provider Fair For You’s award-winning work supporting financially-excluded households to buy essential items, avoid hardship and build financial resilience. Fair for you has harnessed ADP’s auto- mated underwriting technology to assess users; providing rapid real-time screening of prospective borrowers, ensuring affordability and compliance parameters are met. The innovative credit scheme, which is now available nationwide following regional trials, offers microloans of between £25 and £100 to those needing

to smooth out their income. Anyone can apply and, if successful, credit is loaded onto a card that is used in store or online. During the pilot phase, custom- ers paid interest on loans, but for the national rollout Iceland has decided to invest in making all loans interest-free. Iceland Food Club has been supported by HM Treasury, Nesta's social enter- prise Challenge Works and the Esmée Fairbairn Foundation in addition to being nominated for a prestigious Global Good Award. To learn more about the initiative and how to apply, visit the Fair For You website.

Custom Credit is set to use LendingMetrics' Auto Decision Platform (ADP) to speed up decisioning and take its clients’ borrowing experience to the next level. The Sussex-based lender, which specialises in tailoring their loan to their borrower’s needs to ensure optimal outcomes, will be utilising the multi-award-winning underwriting solution in the coming weeks to assess individual applicants' affordability. They also provide customers with that information on a monthly basis to give them a new level of insight into their personal finances.

The digital investment underpins Custom Credit’s focus on using Open Banking data, advanced analytics and state-of-the-art technology to bring together a customer’s financial information and upgrade their personal loan experience. Custom Credit selected ADP after considering the platforms offered by a range of other providers. The API is a next-generation private-cloud- based solution that enables credit risk professionals to create and manipulate decisioning logic in real time, whilst delivering automated decisions in seconds through direct interaction with customers.

David Wylie, Commercial Director of LendingMetrics, said: ‘We’re pleased that after considering the alternatives, Custom Credit has decided that ADP offers the best, future proofed solution. Our team are looking forward to working closely with the company on its next exciting phase of digital development.’ Damien Burke, Founder and CEO of Custom Credit, added: ‘Based on previous experience with LendingMetrics, it was an easy and straightforward choice to adopt ADP. It will help us to provide consumers with the flexibility to stay on track with their finances.’

David Wylie Commercial Director, LendingMetrics

14 | RedAmberGreen

Q4 | 2022

www.lendingmetrics.com

RedAmberGreen | 15

Go to contents page

COMMENT

A taste of things to come LendingMetrics’ Commercial Director David Wylie considers what the lending and referencing landscape will look like in 2032.

"Unaffordable gaming is a significant area of concern for regulators."

The past 10 years have seen major changes to the lending environment in the UK. The year 2012 was a marked- ly different place to the one we know today. Lending was still an analogue world: paper proofs, faxes, and, it goes without saying, sclerotically slow decision making from the borrower’s perspective. Fast-forward ten years and we all know what today looks like in our mostly digital lending environment. The pos- sibility of real time data, auto-assisted underwriting, rapid decision making and 100% accurate affordability assessments. So, given the dramatic level of change we’ve seen over the past 10 years, what can we expect for the next 10? Understandably, it wouldn't be impossi- ble to precisely predict the future path of our sector, but I think we can safely tease out a few strands already appar- ent that are going to develop consider-

able momentum over the next decade. Data will continue to be king. By 2032 all lenders will know that data, rather than products, should be their primary focus. No longer will there be a place for those who largely ignore data streams; or those who focus on tweaking exist- ing products and launching new ones to attract business. The overarching emphasis will be on using granular data to anticipate demand and then coming up with bespoke financial products for individ - uals that mesh seamlessly with their personal life. With data as the keystone of lending, I also see internet media companies coming to take a bigger slice of the lending pie. There can’t be many under the age of 60 who don’t already have a Facebook, Whatsapp or Twitter account, or who do not use payment apps such as Google Wallet or Apple Pay. Social media and payment apps have seen incredible

expansion in recent years. It’s a certain- ty that this will continue and that Meta, Apple and Google are going to want to capitalise on the screen time they attract and the mountain of consumer data that they have amassed. They may well already be testing how accurate their profiling is; setting it against that of the credit reference bureaus. Retrospective analysis to work out how predictive their scores are cannot be far away. We should expect them to be in a posi- tion to harness their platforms and pitch finance propositions to consumers as and when they are likely to be needed. It’s not difficult to imagine the potential: you begin to think about buying a new car; here’s a list of suitable models, best prices, and a choice of bespoke finance propositions. Initially, they could be in partnership with selected lenders, but in time there is no reason to suppose that they will not want to leverage their own balance

sheet to become lenders in their own right. Credit referencing’s closed-user groups will also undoubtedly undergo change over the coming years. The attraction of having real-time banking data as an integral part of every credit file is going to be overwhelming. Open Banking will have taken off - in a way that has not been possible to date - giving real-time access to con- sumer transaction data. Existing credit bureaus will have many more dynamic data feeds to work with, giving them the ability to deliver instant 360 degree assessments. Those currently excluded from the user groups may well gain access for credit assessments, given the quality of the information that will be possible. For example, unaffordable gaming is a significant area of concern for regula - tors, but gaming operators have never gained access to credit data via user groups. The banks have provided it to credit bureaus because they, in return, obtain access to credit files; however

there has been no such quid pro quo with gaming operators. Now that we are entering an era of ever-greater consum- er protection, we cannot expect such exclusions to remain in place forever. The FCA's current review into the credit reference industry makes it clear that regulatory change is on the horizon. With that, we can also anticipate regula- tion demanding additional layers of due diligence as the years tick by. The direc- tion of travel is towards a world where regulation permits only borrowing that is demonstrably in the best interests of the applicant. The day when consumers had to look out for themselves when making bor- rowing decisions will be a distant memory. Consumer duty is the latest emphasis and we can expect more of the same around safeguarding and vul- nerability, demanding yet more layers of required information on top of the traditional loan performance data, bank verification, AML and ID. You have to wonder what volume of lending will be achievable in such a tightly-regulated environment, given

that interest rates may well be high and UK household debt is already at record levels. This, perhaps, more than any of what I have explored above, will be the most important question determining the shape of our business. Could we in 2032 enter an era where regulation has made what could be deemed “unwise lending” impossible, and where far smarter lending is the rule at the cost of relatively static volumes?

Only time will tell.

"Payment apps have seen incredible expansion in recent years."

Above: LendingMetrics' Commercial Director David Wylie

16 | RedAmberGreen

Q4 | 2022

www.lendingmetrics.com

RedAmberGreen | 17

Go to contents page

CASE STUDY

The solution Tymit chose LendingMetrics’

The user friendly design of ADP was yet another benefit for Tymit. The ability to pick things up quickly was pivotal in keeping the implementation process running smoothly. Adding to the reduction of the learning curve, assistance from the credit experts at LendingMetrics along with leveraging access to the ADP Video Training Series allowed the team at Tymit to go from beginners to ADP experts within a short period of time. “ADP has provided us with the flexibility and speed we needed to take our company to the next level of lending.” Rajeev Marwaha, CRO at Tymit The result Following implementation, Tymit is now benefitting from faster builds, better organisation of contracts and improved automated decisioning. With the help of ADP and the LendingMetrics team, Tymit is now able to confidently look to their next stage of growth: building partnerships and expanding the reach and effectiveness of their products. Tymit's customer story is also available to read on our website .

Customer stories: Tymit Revolutionary credit card lender Tymit expanding thanks to the flexibility of ADP

to

work

with

ADP; which provides an intuitive, user-friendly interface, completely customisable decision engines, and out of the box integrations to all major CRA data and Open Banking platforms. “We're very happy with the switch to LendingMetrics.” says Rajeev Marwaha, CRO at Tymit. He says above all, the flexibility and functionality that ADP provides has allowed Tymit to break free of the previous constraints that were holding the business back. With one of their most recent clients, the iterative process within the implementation phase required Tymit to repeatedly access their ADP decision engines to fine tune their credit policy and logic. The level of accessibility within ADP made it possible for their team to make adjustments whenever they needed, even up to and following the point of going live. In addition, the inherent ability to save and test passive engines within ADP before promoting them to live was extremely useful; allowing the team to run high volume live testing on decisions without affecting the live environment or the need to write test scripts, a hugely efficient feature.

More stories

The war on loan sharks Whether it's predatory payday provid- ers or so-called friends with dangerous connections, lenders preying on socie- ty's most vulnerable are ever-present.

Read now

Hold on tight

David Wylie, Commercial Director of LendingMetrics, predicts bumpy times ahead for lenders unable to adapt rapidly to what is becoming constant macroeconomic change.

Take me there

Duty calls

Tymit’s mission is to “Give people the self-confidence to live life to the fullest by offering them credit that’s smart, flexible and honest”. With their instalment-based credit cards, they aim to provide a lending option for customers that is both flexible and transparent and with the assistance of LendingMetrics’ Auto Decision Platform (ADP), they have been able to do just that.

The challenge Tymit provides digital and physical credit cards to customers, allowing them to purchase products using a payment plan in order to pay the debt off in installmentsinstalments of their choice. This allows customers to manage their personal finances more easily without the additional stress of mounting interest and debt. With their previous system, Tymit was limited in both speed and agility when it came to expanding the capabilities of

their platform. Adding services, requesting changes and automating credit decisions was a highly constrained process, leading to slower than desired product growth and customer frustration. They needed a platform that could speed up production while also supporting their values of transparency, flexibility and simplicity.

18 | RedAmberGreen

Q4 | 2022

www.lendingmetrics.com

RedAmberGreen | 19

www.lendingmetrics.com +44 (0) 2394 211010

Page 1 Page 2-3 Page 4-5 Page 6-7 Page 8-9 Page 10-11 Page 12-13 Page 14-15 Page 16-17 Page 18-19 Page 20

www.lendingmetrics.com

Made with FlippingBook - professional solution for displaying marketing and sales documents online