Metrics Monthly | March 2020 | UK Edition

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Metrics M onthly

UK EDITION March 2020

In this issue GAMBLING AT RISK OF PAYDAY TRAP Gambling operators are risking heavy fines and aggressive regulatory action if they do not tighten up consumer checks

In this issue Welcome Page 03

In the news Page 04

Nesta challenge winners Page 06

Gambling at risk of payday trap Page 08

Case study Page 10

Auto Decision Platform Page 12 Auto Efficiency is everything Page 13 Decision Platform

Our online Auto Decision Platform (ADP) saves on time, money and errors, driving more profits to your bottom line. ADP assesses your applicants in real-time, 24 hours a day, and delivers consistent and accurate lending decisions in milliseconds. It’s a multi-award-winning automated decisioning and collections platform that puts you in control.

Make better risk and compliance decisions

Convert more applications

Improve collections

Control using the comprehensive user interface

Run scenarios in real-time


+44 (0) 2394 211010

Lancaster Court, 8 Barnes Wallis Road, Fareham, Hampshire PO15 5TU

+44 (0) 2394 211010

02 | Metrics Monthly

March 2020 | UK Edition


Welcome to our March issue of Metrics Monthly! In such a turbulent time, it wouldn’t seem right to start this welcome note without a few words about what we as a company are doing in the wake of COVID-19. The LendingMetrics team are currently working remotely during the outbreak. Our plans for business continuity were well prepared and audited, and we asked everyone to commence remote working on Tuesday 17 th March. So far everything has worked very well and everyone is operating happily on our secure network delivering to all our cus- tomers as usual. We’re maintaining this positive attitude on page 04, where we reflect on the Chancellor of the Excheq - uer’s recent announcement regarding how the government intends to support businesses and employees. The health and wellbeing of our col- leagues and customers is paramount during these difficult and unprecedent - ed times, and this is why we took the early decision to implement our remote

working plan to help lower the risk of contagion, whilst at the same time being able to continue to deliver our high standards to our customers. These high standards are echoed across our selection of pieces and arti- cles included in this issue of Metrics Monthly. On page 06 we reveal the Nesta Affordable Credit Challenge, which saw community lenders and fintechs partner up to widen access to respon- sible, affordable credit. Our headline piece ‘gambling at risk of payday trap’ sees Managing Director David Wylie analyse the uncomfortable parallels between gambling operators and payday lenders, and warns that if operators do not start conducting thor- ough consumer checks, they could end up going down the same perilous path. If you haven’t subscribed to Metrics Monthly yet, make sure you head to our website to sign up and receive monthly editions straight to your inbox.


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Metrics Monthly | 03

Our online Auto Decision Platform (ADP) saves on time, money and errors, driving more profits to your bottom line. ADP assesses your applicants in real-time, 24 hours a day, and

In the news Improving digital skills and connectivity of SMEs could add up to £15 billion to the UK economy

A new report from Inuit Quickbooks - titled ‘The Digital Opportunity for Small Businesses’ - states that improving digital skills and connectivity could add up to £15.3bn to the UK economy. According to the report, two key areas include improving the ability to use digital tools, which could add £9.9bn (or 0.5% of the total UK GDP), and improv- ing digital infrastructure which could add £5.4bn. The report suggests that SMEs could gain a huge uplift from having better access to digital connec- tivity and utilising existing technology. This follows the news from the govern- ment’s Industrial Strategy Council that regional differences in UK productivity are at their highest level in a century, with digital factors contributing to this.

With SMEs forming the backbone of the UK economy (accounting for more than 90% of employment in 38 of the 173 regions), it is expected that SMEs would be capitalising on digital technology, however the report suggests that busi- nesses are not utilising the opportuni- ties available to them. Key factors that effect this include resource constraints and a lack of IT skills and knowledge. According to Business Money , the solu- tion is for top management to lead the way in their firm’s operations. Because of the large influence that entrepre - neurs and management have across their businesses, their attitude towards digital technology can effect the extent that digital tools are adopted.

The right attitude, at the right time The unprecedented challenge faced by the new Chancellor of the Exchequer, Rishi Sunak, within the first two months of his taking the position, is one that will potentially define his legacy in the history books, and one that he has met head on.

On Friday came the huge announce- ment from the Chancellor that the Coronavirus Business Interruption Loan Scheme will, among other ground-breaking interventions, pay 80% of salary for staff who are retained by their employer, covering wages of up to £2,500 a month . This is a hugely bold move to take, and one that has been welcomed by employers and employees alike across the UK. This, along with other measures , such as the next quarter of VAT pay- ments being deferred and unlimited 12-month, interest-free loans for busi- nesses are impressively bold efforts by the Chancellor and the government

to give businesses the boost of con- fidence needed to retain their current employees, rather than being forced to release them with the forecast of low to no profits in the near future. We at LendingMetrics applaud his determination to do his part to help keep this nation afloat through one of its most turbulent and far-reaching crises in decades. There is also more talk of the government re-addressing support for the self-employed, so no doubt there will be further develop- ments soon. This will be a new experience for us all, but we are confident of our company’s

and our nation’s abilities to pull togeth- er and press on through the most chal- lenging of times. Read the full statement by Rishi Sunak here .

Above: Rishi Sunak giving a press conference about the latest measures to be put in place

04 | Metrics Monthly

March 2020 | UK Edition

Evolution Money awarded Feefo Platinum Award

LM curry night

The got together for their quarterly staff outing this month and it was a fun night out. Sadly, due to the ongoing situation with COVID-19, this was likely to be our last get together for a while, and the original plan was changed last minute. Luckily, Kuti’s, a popular Indian restau- rant in the nearby town of Wickham, was able to accommodate the team at short notice and provided delicious Indian cuisine with great service. LendingMetrics team

LendingMetrics’ have recently been awarded the Feefo Platinum Trusted Service award which aims to reward and recog- nise businesses that go above and beyond to provide an excellent service. partner Evolution Money have been working with LendingMetrics to implement their award-winning Auto Decision Platform (ADP) in order to support continued growth with a much faster, flexible and openly connect - ed decisioning platform that wasn’t available within Evolution Money’s current Loan Management Systems. The award celebrates organisations that have won the Gold Trusted Service award three times in a row, meaning that Evolution Money have provided the very best experience for their customers year after year.

We’re thrilled that Evolution Money have won such a prestigious award and that they are continuing to utilise our automated decision platform to effectively manage their credit risk decisions in real time and provide outstanding service. You can view our case study about working with Evolution Money below.

Read the case study

Above: The LendingMetrics UK team celebrate a successful start to 2020

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Metrics Monthly | 05

Nesta Challenge winners Nesta’s Affordable Credit Challenge winners revealed

In November, we announced that LendingMetrics had partnered with community lender Fair For You and EML Payments as part of a challenge aimed at making credit more accessible and affordable.

The Affordable Credit Challenge , run by Nesta Challenges in partnership with HM Treasury, encourages fintech innovators to partner with community lenders and widen access to responsi- ble, affordable credit. We’re now delighted to publicise that LendingMetrics is involved in one of three winning partnerships between community lenders and fintechs that have secured cash prizes of £200,000 for developing innovative solutions that make credit more accessible and affordable, particularly for the most vulnerable. Our partnership with ethical lender Fair For You aims to make affordable credit more available to those who need it by offering a loan facility to provide buffer credit specifi - cally for an additional frozen food shop in school holidays, when low income

households often use high cost short term credit to cover spikes in grocery costs when children do not have access to free or subsidised school meals. Fair For You have been utilising Lend- ingMetrics’ portfolio of products and solutions to better understand each applicant and their suitability for the loan. In particular, they have used our multi-award-winning Auto Decision Platform (ADP) to make automated credit risk decisions, which is instru- mental in funding small, short-terms loans. In addition, their implementation of OpenBankVision allows Fair For You to gain valuable insight into patterns and trends in income and expenditure, to ensure that affordability – one of the key topics in our last issue of Metrics Monthly – is measured accurately. About the partnership, Neil Williams,

Chief Technology Officer at Lending - Metrics, said: “We’re really pleased for the opportunity to continue our work alongside Fair For You. Research has shown that many families are facing financial struggles, particularly during the school holidays, and it’s important that there is a way for these families to find an affordable way to borrow money. Fair For You’s ideas will be another step towards providing affordable credit to those who need it.” Fair For You, LendingMetrics and EML Payments ’ partnership was announced as a finalist for the challenge in Novem - ber and the organisations have since been working closely to pilot a trial of the scheme with a leading supermar- ket. Along with an initial £150,000 grant, the six finalists were also supported by Nesta Challenges and HM Treasury

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March 2020 | UK Edition

Fair For You has been considering for some time how to provide small amounts of credit that would alleviate the food poverty experienced by lower income families during school holidays. This requires us to find effective ways of pro- viding small amounts of credit for a freezer food shop with flexible weekly payments, mirroring the solution we have devel- oped for other essentials.

to develop their solutions with non-fi - nancial assistance such as networking events and legal support. The Nesta judging panel then chose three Prize winners with a forward-looking judge- ment, taking into account process achieved by the partnerships during the challenge. Joanna Elson OBE, CEO of Money Advice Trust, and chair of the Affordable Credit Challenge judging panel, said: “There is a huge need for affordable credit, and we know that technology can help credit unions and others to both reach people who need it and provide the kind of service that mainstream financial institutions offer. The panel was really impressed by all the finalists - and we’re looking forward to seeing the results of these exciting partnerships.” Nesta Challenges uses challenge prizes to stimulate innovative solutions to some of the biggest challenges we face. Challenge prizes are a simple but powerful idea. A problem or opportunity is identified, the challenge is publicised and rewards are offered to those who

can deliver the best solutions. Over 8 million people in the UK use credit to pay for everyday household expenses, and many of them struggle to access fair, affordable credit. 82% think more needs to be done to ensure there are alternatives to high-cost lenders, and Fair For You’s idea aims to do this by easing financial pressure in low income families brought on by school holidays, when there is a spike in the use of high cost short term credit and foodbanks. Chris Gorst, Head of Better Markets at Nesta Challenges, said: “The three winning partnerships are great exam - ples of how technology can remove some of the barriers that currently prevent community lenders widening access to affordable and fair credit. Social lenders haven’t historically been able to compete with high-cost alterna- tives on speed or reach and uniting with fintechs addresses this issue. As these partnerships are becoming a reality, I believe we will see the beginning of a transformation in the personal lending market to support those who need it most.”

- Angela Clements

CEO of Fair For You

The Social Impact of Fair For You A 2016 report looked at the differ- ences that Fair for You is making to the lives of its customers.

Read the report

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Metrics Monthly | 07

Gambling at risk of payday trap Gambling operators are risking heavy fines and aggressive regulatory action if they do not tighten up consumer checks

David Wylie, Managing Director of LendingMetrics, fears many gambling companies are underestimating the impact tougher regulation will have on the industry, which sees uncomforta- ble parallels with payday lending. David Wylie said: ‘When I talk to gam- bling operators today, I am reminded of conversations I had with payday

lenders back in the early 2010s. They had successful businesses, but they did not see the massive effect regulation was going to have. Poor consumer suitability checking basically led to a large number of them going out of business. They experienced a sort of double whammy - a regulatory crackdown and a sudden explosion of mis-selling claims.’

Mr Wylie says too many gambling operators are failing to conduct ade- quate suitability checks on consumers, leaving them vulnerable to a similar reg- ulatory and consumer kickback. ‘The common denominator is inadequate affordability and suitability checks. The payday industry failed to invest in this area when it should and paid the price, and gambling operators are now in a

08 | Metrics Monthly

March 2020 | UK Edition

position where they have a window to act. My hope is that they do not leave it until it is too late.’ Mr Wylie says gambling operators must ensure they have rigorous consumer checking in place, something which is now possible thanks to Open Banking. Such ‘real-time’ checks should include all key income and spending data, so that a prospective gambler who cannot afford to gamble, does not. ‘A gambling operator needs to be able to point the regulator to a convinc- ing electronic audit trail to justify its actions, rather than a collection of tick- box pages and a photocopy of an old bank statement. Those that cannot do this, or do not plan to have this in place,

are asking for trouble,’ added Mr Wylie. Open Banking effectively forces banks to share their line-by-line detailed cus- tomer statement data with third parties, known as Account Information Service Providers (AISPs). Anyone can access 100% accurate real-time data on con- sumers via AISPs, such as LendingMet- rics, that provide automated underwrit- ing tools. Someone applies to gamble, agrees to limited timeframe and read-only access to their accounts, and thousands of lines of transactions can be analysed by computer. In an instant, this can pull out salary details and all financial commit - ments, to be then tested by algorithm to determine whether this individual

should gamble. Inadequate finances and other gambling accounts will be flagged.

Above: LendingMetrics Managing Director David Wylie

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Metrics Monthly | 09

Auto Decision Platform

Our online Auto Decision Platform (ADP) saves on time, money and errors, driving more profits to your bottom line. ADP assesses your applicants in real-time, 24 hours a day, and delivers consistent and accurate lending decisions in milliseconds. It’s a multi-award-winning automated decisioning and collections platform that puts you in control.

Make better risk and compliance decisions

Convert more applications

Improve collections

Control using the comprehensive user interface

Run scenarios in real-time


+44 (0) 2394 211010

Lancaster Court, 8 Barnes Wallis Road, Fareham, Hampshire PO15 5TU

+44 (0) 2394 211010

How can you ensure consumers don’t get impatient? Find out about ADP’s efficient origination in this video! Efficiency is everything

Frequently Asked Questions Who is ADP integrated with? All of the major credit bureaus including Equifax, Experian and Illion/Proviso. We are also integrated with Open Banking, Machine Learning, SME–Business data and various other fraud and ID solutions, so you can easily switch bureau or go “multi-bureau” without any fuss. How will ADP save my business money? • More lending with fewer new staff • Better credit decisions = better loan book performance • Trade 24/7 = convert more customers

How will ADP improve my compliance and credit risk processes? By removing human subjectivity and error from those criti - cal aspects of the decision making process and instead making consistent decisions based upon data and evidence, your clients will be consistently checked and verified exactly in accordance with your policies. This makes your systems more robust and enables you to assess performance on a known benchmark rather than unquantifiable “underwriter intuition”. Can I see it for myself? Of course! We can’t wait to show you a web demo or even in person should you prefer. Please get in touch via our enquiry form here or call us during office hours on +44 (0) 2394 211010.

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