Metrics Monthly Q1 | 22

METRICS MONTHLY Inflationary borrowing spike

Q1 /22 31 Mar 2022

Data comes of age Major milestones for Open Banking Should BNPL fear regulation?

Inflation is going to lead to bumper levels of borrowing come mid-Spring, according to LendingMetrics’ CTO Neil Williams

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“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



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

Consumer lending

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

Car finance



“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



Mortgages

“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

“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



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Editor's letter

Contacts

Welcome back to your quarterly edition of Metrics Monthly! Spring is officially here and the easing of Covid restrictions has left me with a spring in my step, and a positive outlook on the year ahead.

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

Our own product, OpenBankVision (OBV), is a revolutionary bank state- ment data platform that could help you make better lending decisions. Find out more by watching our video on page 21. Whilst our lives may be returning to normality, automated decisioning is only set to evolve and adapt further, which we look at in more detail in 'data comes of age' . A less positive change in the industry is that of the Buy Now Pay Later sector facing tighter regula- tions, but this need not have the same crushing impact as it did on payday lending according to CEO David Wylie. Read the full story on page 14. I hope you enjoy reading this issue of Metrics Monthly and the warmer days ahead, and I look forward to catch- ing up with you for our next quarterly issue. In the meantime, I'll be dusting off the patio furniture and planning that long-awaiting Summer break after what's seemed like a long, challenging couple of years.

The sudden onset of what felt like an early Summer sparked debates among many as to how many layers to leave the house with, and whether it was too soon to bring out the flip flops. Amidst proud declarations of having our first ice-cream of the year, the rising level of inflation has also got us all talking, but it's not necessarily a bad thing according to LendingMet- rics' CTO Neil Williams. In our article 'inflationary borrowing spike', he con- siders how this could lead to bumper levels of spending come mid-Spring, which is good news for many in the finance sector. This quarter also saw the 2 year anni- versary of the first country-wide restric- tions to be put in place as a result of the pandemic. That's not the only anni- versary of note though, as the Open Banking initiative turned four years old, and to celebrate the occasion we look back at how far it has come on page 06.

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Metrics Monthly | 03

In this issue

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

A selection of newsworthy pieces that you might have missed this quarter, including major milestones for Open Banking and a positive move towards green mortgages for the BTL sector

06

08 Data comes of age

Chief Technology Officer of LendingMetrics looks at how automated decisioning has moved from fringe technology to mainstream game changer

10 Company updates

Recent news from LendingMetrics including new appointments and a return to the Credit Summit

12 Inflationary borrowing spike

Inflation is going to lead to bumper levels of borrowing come mid-Spring, according to LendingMetrics’ CTO Neil Williams

08

11

12

04 | Metrics Monthly

Q1 | 2022

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14 Should BNPL fear regulation?

David Wylie, CEO of LendingMetrics, says regulation need not have the same crushing impact on Buy Now Pay Later as it did on payday lending

16 Customer stories

Ethical lender etika benefit from champion/ challenger testing with newly implemented ADP

14

18 Was it something they said?

Head of Sales Claire Januszczak considers why new LendingMetrics clients are moving over from huge competitors

19 Conferences to feel impact

LendingMetrics recognised for second year in a row at SME News’ Business Elite Awards

20 Second win in a row

Find out how the revolutionary bank statement data platform by LendingMetrics can help you make better lending decisions today!

16

22 A banking data revolution

Find out how the revolutionary bank statement data platform by LendingMetrics can help you make better lending decisions today!

18

22

www.lendingmetrics.com

Metrics Monthly | 05

NEWS

In the news

BTL mortgage sector goes green The number of green products in the BTL sector have reached a new record high, according to Mortgag- es for Business. BTL choices available have risen for seven consecutive months, up from 118 green BTL mortgages to an impressive 353 available on 1 March 2022. Green mortgages now make up 15% of all BTL products available on the market, which is a positive step in the direction of tackling climate change. This increase demonstrates lenders' willingness to innovate. Energy efficient improvements to housing, including upgrading exist- ing housing and making new builds greener, will lower the sector's carbon emissions, which current- ly make up 14% of the UK's total emissions. Managing Director of Mortgages for Business, Gavin Richardson said: "housing has a greater carbon footprint than the farming industry. So there’s no question that improv- ing energy efficiency is a critical part of tackling climate change."

United Trust Bank enter buy-to-let market

Specialist bank United Trust Bank have announced they will enter the buy-to-let (BTL) market with a suite of new products. United Trust Bank is a prominent UK specialist mortgage lender providing a range of innovative first and second charge products through its panel of approved introducers. Known by busi- ness partners and customers alike for its dependable reputation for making quick, consistent and common-sense decisions, the bank prides itself on the work of its expert underwriting team. Director of Mortgages at United Trust

Bank, Buster Tolfree, commented: “We’ve really shaken up the specialist end of the mortgage market with our first and second charge residential products and launching into the BTL market is a natural next move. “The new BTL products will be typical of UTB; common sense underwriting and accessible criteria packaged up in a digital first process. We’ll utilise our existing application platform offering cutting edge digital processes support- ed by skilled and knowledgeable staff dedicated to ensuring applications are processed quickly and smoothly.”

06 | Metrics Monthly

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Major milestones for Open Banking This quarter we saw two major mile- stones for the Open Banking initiative. In January, the revised Payment Ser- vices Directive (PSD2) turned four years old, and to celebrate the occasion we wanted to look back at how far it has come, and what we can expect for the future. The Open Banking movement has changed the way that products and services are being consumed across the world. The UK was considered to have largely led the way with it, after the Open Banking Standard was imple- mented in January 2018, allowing con- sumers to have the legal right to access their payment accounts through third parties. The adoption of Open Banking began gradually as providers built the neces- sary API technology but events of the past two years accelerated the move- ment. As a result of the 2020 coun- try-wide lockdown, existing trends towards electronic payments advanced, showing us that the future of the finan- cial industry relied on the adoption of faster digital methods. Whilst not a great year for many of us, 2021 proved to be great for Open

Banking, with over £10 billion worth of payments made using it in that year alone. You may remember our article Open Banking in a Pandemic, which looked at how the initiative was able to help those whose personal finances were affected by the Covid-19 crisis. Open Banking became instrumental in providing access to up-to-date bank transaction data, allowing lenders to gather a detailed picture of a consum- er’s finance. Platforms such as Lend- ingMetrics’ OpenBankVision (OBV) allow finance provider to access accu- rate data, in real-time, meaning they can make better lending decisions and relia- bly assess affordability. Also in January, the initiative reached another impressive milestone of having more than 5 million active users in the UK. This marks an important moment, as the trajectory of this growth con- tinues to increase: in 2020, it took 10

months to grow the number of users from 1 to 2 million, but has only taken 4 months to increase from 4 to 5 million more recently. Trustee of the Open Banking Implemen- tation Entity (OBIE) Charlotte Crosswell commented: “Open Banking was pred- icated on delivering increased com- petition and providing consumers and small businesses with new and innova- tive solutions. It is therefore extremely encouraging to see that more than 5 million active users are now leveraging the benefits of open banking. "This accelerated growth strongly rep- resents a world-leading and thriving ecosystem bringing an ever-increasing range of real-world solutions, that in turn is driving mass user adoption. As open banking technology embeds and becomes easier to use, we look forward to seeing this momentum continue.”

The LendingMetrics Exchange Multi-bureau CRA data AML and ID verification Exclusive premium service Find out more

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Metrics Monthly | 07

Data comes of age

Neil Williams, Chief Technology Officer of LendingMetrics, looks at how automated decisioning has moved from fringe technology to mainstream game changer. Underwriting technology has come a long way since it was first introduced to the sector, and I can recall the very beginnings of such technology as early as the mid-naughties. The early days were not easy for com- panies with new automated underwrit- ing APIs to sell. Attitudes surrounding the use of technology in what had tra- ditionally been a pretty labour-intensive area - underwriting - were entrenched. Why would any lender want a ‘comput- er says no’ solution when they had a perfectly good team of underwriters in place? Conversations with what became the early adopters of this transformational technology were always challenging. You would often find that while you might have persuaded senior manage- ment of the benefits, the deal would falter at the eleventh hour when they could not sell the technology internally. There were too many defensive man- agers with groundless worries about their departments or jobs being made obsolete. Part of the issue was the use of the word automated, which many misinter- preted as meaning the end of all manual input (and therefore redundancy for the underwriting team). A key element of the learning process involved telling lenders that the term automated under- writing covered a very wide spectrum, and that their position on that spectrum was determined by the sort of lending they were involved in.

If most of their lending involved sums of under two hundred pounds, then they might want to automate 90% of their transactions (given the dispropor- tionate cost of manually underwriting such cases). Alternatively, if they were a mortgage lender, then they may prefer to retain manual review and only auto- mate the early stages of their screening process.

I would unpack the automated under- writing process and tell lenders to rather think of their back office as perhaps 20 tasks, of which they may well be able to automate the first 15. Also, if they did, they could then free their existing team to focus on areas that actually benefit- ed from human input. No redundancies, just a refocusing of the team. Eventually, the message did get through to lenders. Bit by bit.

08 | Metrics Monthly

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They began to see that the technolo- gy could, in seconds, provide granular insight into prospective borrowers by interrogating line-by-line their finances; that score card changes could be made at the press of a button; that borrower screening did not always need costly credit bureau searches; that decisions could be 100% in line with a lender’s credit policy; and that an electronic audit trail was there to protect them from mis-selling claims. As a result of many of those conver- sations, we have now reached a stage where the technology is familiar to most in this industry. A sizeable number of lenders at all ends of the spectrum - from high-cost short-term credit to mortgage - are utilising it. Using the Rogers’ technology adoption life-cycle, we have moved on from ‘innovators’, through ‘early adopters’, and will shortly reach the stage of ‘early majority’. Those that already have it, have been benefiting from what is better termed assisted decisioning’s ability to deliver optimal lending outcomes (for both the borrower and the lender) and the ease with which it permits lending to be scaled according to appetite. Such lenders are currently looking to take automated underwriting to the next stage: leverage the technology going forward so that it can deliver even greater value. Two areas that are particularly exciting in this context concern machine learn- ing and multi-bureau credit searches. Machine learning (ML) involves the use of algorithms that improve process- es automatically through the mining of data. Essentially, it amounts to the formulation of best practice in an algo- rithm that, over time, gets better and better at doing its job.

Up to now the only way companies had access to this sort of sophistication was to pay a data analyst to go away with their raw data and, over a period of many weeks, work out what lessons could be learnt. The result was that not nearly enough data analysis was conducted by a typical lender, which is incredibly ironic given that lenders are ultimately data-driven enterprises. Platforms such as Auto Decision Platform (ADP) by LendingMetrics, however, can empower lenders to harness their data for immeasura- bly better quality decision making. A lender can set an ML process in motion - swiftly deployed using ADP - that will tell them in minutes what, for example, are the best combination of predictive values on which to base a loan decision. And there is no costly data analyst to employ. Lenders have always aspired to be able to use multi-bureau credit checks in their decisioning. Individual bureaus tend to have their strong and weak points, so a multi-bureau search makes a lot of sense. However, the majority of lenders are limited to a single search from one of the three usual providers. Given the extra cost, two credit search- es are rare, three even rarer, and only if the loan is of a size that warrants it. In this instance, platforms such as The LendingMetrics Exchange (LMX) are, for the first time, making multi-bureau searches possible and affordable. At long last, on the basis of one contract, lenders can tap into two bureaus (in the case of LMX this is Equifax and Experi- an) to deliver a better informed search. Combined with ADP, this power couple allows lenders to easily apply and adjust their multi-bureau strategies at will. While these two facets of assisted decisioning are being enthusiastically

embraced by the sector, there has been one other that has not had the speedy adoption that I first imagined. Open Banking has not really gained the trac- tion that was first originally thought for a number of reasons. While it does deliver real-time transac- tion access, unlike bureau searches, it does not showmissed loan instalments or previous adverse history. It also intro- duces several extra pages of friction to consumers, which not all of whom will push through. Furthermore, unlike Open Banking, credit searches always deliver a 100% response. The only way I see this situation chang- ing will be if the use of OB data is com- pelled by regulators, as it is in countries such as Australia. And there is no indi- cation of this being on the cards in the UK just yet. Looking ahead to the next six or seven years of automated decisioning, I am certain that what we have seen so far is just a small sample of what is to come. The future for lending is going to be more and more about data and the technology that leverages it. As I keep on saying to lenders, their USP is not simply their products but also their data. Those that fully appreciate this and act accordingly are going to the ones that succeed.

Above: LendingMetrics Managing Director and Chief Technology Officer Neil Williams

www.lendingmetrics.com

Metrics Monthly | 09

NEWS

Company updates Credit Strategy's Credit Summit makes an in-person comeback

Having been held digitally in previ - ous years, the 2022 Credit Summit returned as a live in-person event and the LendingMetrics team were delight- ed to attend the event. At the heart of Credit Strategy 's Credit Week, the Summit brings together high-level credit, regulatory and eco- nomic professionals. Members of the LendingMetrics Business Development Team hosted an exhibition stand at the event, which gave the perfect oppor- tunity to meet decision-makers and influencers across the entire credit and financial services industry. Visiting from the company's Australia branch, CEO David Wylie also presented a talk about the future of decisioning, including how credit risk professionals can benefit from the multi-award-win- ning Auto Decision Platform (ADP).

New appointments and promotions at LendingMetrics LendingMetrics has made a range of new appointments to ensure high delivery standards as its customer base expands.

Ben Smith has joined the company as Account Manager; Kelvin Lee as Support Engineer; Ross Tully as Busi- ness Development Manager; and Paulo Bordeira De Brito as Developer. Along- side these changes, Craig Jenkins has been promoted to Solutions Manager and Abigail Sinclair has assumed the role of HR Officer. David Wylie, Commercial Director, said: ‘More lenders are reassessing their back offices and moving into the digital era with our products. The strengthened LendingMetrics’ team will maintain the high standards we’ve always strived for as our customer base grows.’

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The LM team starts their engines With the restrictions of the pandemic lifted, the LendingMetrics team was finally able to hold their postponed Spring event, with a fun evening of go-karting followed by dinner at an Indian restaurant.

Employee spotlight

About the event, visiting CEO David Wylie said: "it was great to be able to join in with such a fun staff event, which marked the highlight of my trip to the UK - not least because I walked away victorious with a gold trophy! At Lend- ingMetrics, we value the importance of staff events, especially following our choice to instigate a hybrid working scheme. We're pleased to be able to support staff in this way and reward the team for what has been a busy, yet suc- cessful year so far."

David Foster, Developer

Split into two teams, the employees of the UK office raced twice, with bronze, silver and gold winners crowned at the end. Following the races, the team recharged with curries and drinks at local restaurant Kuti's, a LendingMet- rics favourite.

David has been with Lending- Metrics since 2019 and joined the company through an unusual process after a chance encounter. Having previously worked as an engineer, he was pursuing a career in trading which led him to start learning to code, beginning with Python. Alongside studying, David was working at a local coffee shop when he met the company’s Head of Operations and they started talking about David’s career plans. LendingMetrics presented several paths available to him and he wanted to continue learning about coding so joined the team as Devel- opment Support. This rare opportunity came at a turning point in David’s career and has led him to progress at Lend- ingMetrics to become a Developer, with the aim of advancing further and eventually leading a team.

LendingMetrics presented the perfect opportunity to get one foot in the door and explore a career in development.

Above: The LendingMetrics team showed their competitive sides at the Spring event

www.lendingmetrics.com

Metrics Monthly | 11

Inflationary borrowing spike COMMENT

Inflation is going to lead to bumper levels of borrowing come mid-Spring, according to LendingMetrics’ CTO Neil Williams. It’s no secret that the UK economy has entered an era of higher inflation follow- ing a long period of very modest price growth. Over the last 20 years, prices have only edged above the two per cent mark once back in 2011, when they briefly hit 4.46%, only to quickly revert to more ‘normal’ levels. This time around, there aren’t many of us who would predict that prices will fall back quite so quickly, and that’s because we are in a very different place to that of 2011. Back then, the drivers of inflation, wage growth and product

prices, were being held firmly in check by a plentiful supply of labour, support- ed by the free movement between the UK and the rest of the EU, and a seem- ingly inexhaustible supply of cheaper manufactured goods from the Far East. Today, labour is a much more scarce resourceandsupplyconstraintsbrought about by the pandemic have resulted in steeply rising prices for goods and ser- vices. Further pressures are in the pipe- line in the form of significant higher oil prices and this is in turn feeding in to employee wage expectations. Undoubtedly, we are in for a spell of continuing inflation at, or above, the five per cent mark, in fact in a recent inter- view for the Guardian, Isabel Stockton, a research economist at the Institute for Fiscal Studies said “interest payments

on indexed linked debt were calculated using an alternative measure of infla- tion, the retail prices index which is running at 7.8%” and wider predictions have even suggested double digit infla- tion rates later this year. The money we have in our pockets is not going to go as far as it used to and our savings are set to be whittled away over time. The mainstream media will present this as a uniformly bad thing, which is largely true, especially if it leads to a wage-price spiral as it has at times in the past. But inflation is not all bad news. Like a lot of things, it does have an upside. What is often forgotten is that inflation stimulates economic activity. It acts as

12 | Metrics Monthly

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a spur to greater levels of spending and - by implication - borrowing over and above that which would apply during periods of low inflation. During times of high and rising prices, consumers see little point in holding on to the cash that they have when they know it is steadily losing its value over time. Why delay the purchase of something when, the longer they wait, the more expensive it will be? Inflationary periods in the past have all featured this spending incentive, par- ticularly when the cost of borrowing has appeared comparatively low when set against high inflation. This increased spending and borrow- ing sky-rockets as consumers realise that saving money to purchase a product outright may not make sense. Why wait, given that the product is likely to be that much more expensive and their savings worth that much less? This is particularly the case when con- sumers can access low rates of inter- est. At the present time there is a lot of finance available on rates of interest substantially lower than the inflation rate. We do not know how long this dispari- ty will remain in place, but, so long as it does, there will be a powerful impetus to borrow and spend now rather than later, particularly for short term needs. At LendingMetrics, we believe that the rising level of UK inflation is more than likely to spur a UK borrowing surge in the run-up to Spring. We have the drivers in place: a high inflation rate, plus a plentiful availability of lower interest rate loans. "There will be a powerful impetus to borrow and spend now rather than later, particularly for short term needs"

Canny borrowers can currently avail themselves of finance that appears amazingly good value when set against inflation’s 5.4% (December’s Consumer Price Index) or nearly 8% depending on which measure you sub- scribe to. Buy Now Pay Later borrow- ing - already a £2.7 billion sector - can expect to go from strength to strength over the coming months, as can other lenders with competitive products. This buy-and-borrow-now phenom- enon will take place against a back- drop of large volumes of deferred purchasing. Consumers are only now fully shaking off the restraints that Covid has placed on them and their spending levels. There is an awful lot of consumption that has been suppressed over the past 18 months and it is now coming to the surface. Already we can see this beginning to happen in our data. The volume of transactions that passed through our company’s Auto Decision Platform (ADP) jumped 56% during January 2022, as compared to 2021. This came on top of a 35% rise across our products during the fourth quarter of 2021 and an 18.9% rise in the third quarter. We see every reason for this trend to continue through the remainder of the first quarter of 2022 and into the Spring. With Q1/22 being 42% higher than Q1/21, our prediction is that April-June (Q2) spending may be up some 25% compared to last year. That will take it above the pre-Covid second quarter of 2019. Lenders that have the right product at the right price, and, importantly, the back-office capability to flex with dra- matically increasing volumes, are well placed to do very well over the coming months. They should prepare for a record 2022.

Related articles Data comes of age

Neil Williams, Chief Technology Officer of LendingMetrics, looks at how auto- mated decisioning has moved from fringe technology to mainstream game changer.

Take me there

Should BNPL fear regulation?

David Wylie, CEO of LendingMetrics, says regulation need not have the same crushing impact on Buy Now Pay Later as it did on payday lending.

Read now

A banking data revolution Find out how the revolutionary bank statement data platform by Lend - ingMetrics can help you make better lending decisions today!

Find out more

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Metrics Monthly | 13

COMMENT

Should BNPL fear regulation? David Wylie, CEO of LendingMetrics, says regulation need not have the same crushing impact on Buy Now Pay Later as it did on payday lending.

Those operating in the UK’s booming £2.7 billion Buy Now Pay Later (BNPL) industry are understandably concerned at the present time. It looks like the sector is in line for the sort of treatment that knocked the stuffing out of payday lending from 2015 to 2020. The Financial Conduct Authority (FCA) has the BNPL sector firmly in its sights, believing there is an 'urgent need' to protect shoppers from 'a number of potential harms', including the possibility of racking up thousands of pounds in debt and spending more money than consumers can afford. It says that although BNPL products are frequently interest-free, borrowers can be hit with default or missed payment fees and, as a result, may consistently take out additional loans that they will not have the means to repay. The regu- lator is particularly troubled by the fact

that 75% of BNPL loans are to the 18-35 year age group. Under plans being currently drawn up by the government, consumers will have to undergo far more stringent affordabili- ty checks and will ultimately be able to complain to the Financial Ombudsman Service if they believe a BNPL loan was ‘mis-sold’. The changes, which are currently subject to industry consultation, are intended to bring the sector into line with existing lenders like credit card and personal loan providers, where much tougher eligibility and ‘treating custom- er fairly’ checks already apply. Even though BNPL is not yet regulated, the FCA is already using the Consumer Rights Act to force some firms to make contract cancellations and continuous payment authorities fairer. It has also

stipulated that Clearpay, Laybuy and Openpay voluntarily refund some cus- tomers who have been charged late payment fees. Understandably, the fear at the back of the minds of everyone in the BNPL industry is that the impact of this new approach will be a claims chasing free- for-all, similar to the one that decimated the payday sector. Fresh in their minds "I have good news for those who are tempted to fear the worst and im- agine that a similar fate awaits them" will be the names of those that were weighed down and ultimately defeat- ed by the sheer volume of claims that came their way. Probably the most notable of these – Wonga – began down the slippery slope to administration with the intervention of the FCA in 2014, seeing a cap placed on what they could charge, stricter cri- teria on lending and a plethora of claims against them for irresponsible lending. The business wrote off £220 million of debt for hundreds of thousands of customers, which inevitably led to their downfall. Tales like that of Wonga have haunted the industry for years, with lenders wondering which sector will be next. Well, I have good news for those who are tempted to fear the worst and imagine that a similar fate awaits them. BNPL is in a much better place than that occupied by payday lenders five or so years ago. There is every reason to believe that - given the right precautions - the sector can still thrive over the next decade.

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My optimism is largely down to one fact: The automated back-office systems that can now be employed are light years ahead of what was availa- ble to payday lenders when the claims chasing snowball began to gather momentum. "There can’t be many who are still unaware of how they ensure rapid, optimal outcomes for both the lender and the borrower" We all know how assisted decisioning APIs - the Open Banking based plat- forms that automate much of a lender’s underwriting process - have improved the loan application process. There can’t be many who are still unaware of how they ensure rapid, optimal out- comes for both the lender and the bor- rower. Platforms such as LendingMet- rics’ Auto Decision Platform (ADP) have been quietly working in the back- ground for some time now, ensuring affordability criteria is always met and running checks that lead to the right decision from both the consumers’ and lenders’ perspectives. There will not be as many though who know that the technology has a welcome extra benefit; it means lenders no longer have to rely on patchy due dil- igence documentation - often amount- ing only to a disparate mix of paper proofs - when trying to defend mis-sell- ing claims. They now have a robust decision-mak- ing process, not susceptible to human error, that generates a digital audit trail able to stand up to the most intense scrutiny; much like that of the payday lenders. All of the data elements that go towards making every decision are stored and an audit kept of how they are used. So, unlike their payday counterparts, BNPL lenders can have a lending policy

in place that is signed off by their com- pliance team and diligently enforced by technology. Their decision making can be 100% consistent and backed-up by a digital footprint. Going forward, if a mis-selling claim is made, a lender has a watertight justi- fication for its decision to present to a regulator. Something that most payday lenders could only dream of having. BNPL operators will therefore largely be able to weather any storm that new reg- ulations and claims chasers generate. They will have the capability to handle mis-selling cases in a much more cost-effective and impressive manner than payday lenders. Instead of the time-consuming task of manually col- lating documentation to support their case, all they need do is retrieve the digital record at the press of a button. Those cases that are filed with the Ombudsman will no doubt still involve a costly admin fee that has to be paid for by the lender, but this time the cases will be much more difficult to prove. And this alone will steer claims chasers away from lenders that have invested in a digital back-office.

Claims chasing companies have a known ruthlessness for setting their sights on those lenders that they think are easier targets. If there are to be any casualties of the regulatory changes in hand, it will be those lenders that fail to update their back-offices over the next 12 months. But those with the right decisioning technology in place can rest easy. Should the need arise, they will have the equivalent of a silver bullet to present to a regulator or claims chaser.”

Above: LendingMetrics' Commercial Director David Wylie

www.lendingmetrics.com

Metrics Monthly | 15

CASE STUDY

Customer stories Ethical lender etika benefit from champion/challenger testing with newly implemented ADP

tomers that get into difficulty will not increase their debt. They believe that if the risk modelling and decisioning isn’t correct, it’s etika’s responsibility, not the consumer’s. The choice Prior to choosing to work with Lending- Metrics, etika was doing a lot of work in-house, such as monitoring changes in the market, rather than using a third party. Previously, all risk decisions were decided by a technical team, rather than a credit risk department, using an in-house decision engine. The lender wanted to be able to concentrate more on growing the business so began to look at what technological solutions they could use to improve processes.

They soon recognised that they wanted a decisioning system that could be managed by a credit risk resource and Auto Decision Platform (ADP) was the clear solution. LendingMetrics’ consul- tative approach allowed them to clearly demonstrate potential and flexibility of the solution. The experience Since implementation, etika have found the ongoing support and project man- agement from LendingMetrics invalua- ble. According to etika, when they have encountered challenges or want to initi- ate something new in ADP, the Lending- Metrics team have always been happy to help.

Founded in 2012, etika delivers fair and flexible

financial products in a socially responsible way to customers, retailers and partners. About etika can be selected as a payment option at checkout - also known as an “at the basket lender” - with a number of retailers. The technology-driven company actively seeks out retail partners that meet their standards for ethical finance, ensuring they put the financial well-being of customers first. Unusually, the lender does not charge fees for late payment, meaning cus-

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They have found the reliability and sta- bility of the platform very strong, which was an important factor in their choice of solution. The provider also loves the modular nature of ADP as each of their retailers necessitates a separate set of requirements. etika prides itself in offer- ing tailored solutions for their partners. Their three main operators, for example, have completely different requirements, and ADP’s intuitive Engine Editor has made it simple and efficient for etika to confidently modify their policies, algorithms and risk appetite instant- ly, with no coding experience needed whatsoever. Having a versatile team, etika have found it easy for non-credit employees to learn how to use the system. With every ADP contract, clients receive access to the Video Training Series, which com- prises hours of custom-made training videos direct from LendingMetrics’ ADP experts, at no extra cost. A particular highlight for the lender has been the ability to conduct champion/ challenger scenarios. Previously, etika found this very difficult but now they are able to use the passive engine func- tionality to test logic changes against real-time data - without affecting live

lending decisions - giving a highly accu- rate method of identifying the outcome of those changes. The result etika will continue to focus on growing the business with ADP at the forefront of their credit risk strategy, ensuring they maintain their ethical stance and continue to lend in a socially responsi- ble way. Looking to the future, etika are introduc- ing a multi-bureau credit risk strategy, utilising The LendingMetrics Exchange (LMX), which provides access to both Equifax and Experian credit reference, AML, affordability and anti-fraud prod- ucts through one single API, and one contract. Chief Technology Officer, Neil Williams, said: ‘We’re looking forward to continu- ing to work with etika to further roll-out ADP in more territories and introduce multi-bureau credit reference data via our LMX platform. This will see them benefit extensively from preferential contractual terms alongside our white- glove service and extensive multi-bu- reau expertise.’

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Metrics Monthly | 17

COMMENT

Was it something they said? Head of Sales Claire Januszczak considers why new LendingMetrics clients are moving over from huge competitors

As an SME financial technology company, we take pride in the person - al approach we give to our custom- ers. More and more frequently we’re seeing new clients join us from our much larger competitors, which has led me to wonder: “was it something they said?” . The UK FinTech sector registered a record year in annual investment in 2021, demonstrating a huge 217% increase from 2020. The number of new start-ups is only set to increase, yet our clients are bypassing those with fresh investments, and the much larger FinTech giants, to work with our expert and well-established team. What makes us stand out in the crowd is not only our multi-award-winning products, but our experience with both settled lenders and those launching new products into the market. In particular, new credit companies are utilising our expertise in the sector to develop sophisticated decisioning engines to assess afforda- bility and manage credit risk with new applicants. But I don’t think it’s just this experience

that is resulting in an influx of enquiries. Since it was established over a decade ago, LendingMetrics has built an envi- able reputation for our exemplary cus- tomer service. Every year we conduct an ISO-recognised satisfaction survey and the latest results speak for themselves. We received an average score of 9.06 out of 10 for overall services received, with 9.24 out of 10 for swiftness of response to support queries. As the fifth consecutive year we’ve conducted this survey, these results marked a new record high. Customer service is a major factor in everything we do, which is why we continue to invest in high quality tech- nical support, with dedicated engineers always available during working hours and additional out-of-hours support. As a result, our active support tickets are kept to a minimum, meaning we can react rapidly to any technical issues, and it’smostly because of this approach that our ground-breaking decisioning platform ADP has a near 100% uptime. As Head of Sales, I’m proud of our cus- tomer-centric approach to business,

and you’ll often catch me singing the praises of our support team and our expert business analysts. With more exciting developments in the pipe- line for 2022 and beyond, I’m looking forward to having more conversations with lenders about their plans for the future and how LendingMetrics might be able to assist in the process. To book an exploratory call with a member of the team, and find out more about why so many people are choosing to partner with us, get in touch today.

Above: LendingMetrics' Head of Sales and Partnership Manager Claire Januszczak

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Metrics Monthly | 19

NEWS

Second win in a row LendingMetrics recognised for second year in a row at SME News’ Business Elite Awards

LendingMetrics is pleased to announce it has been awarded Best Credit Data and Risk Technology Solutions Agency within SME News’ Business Elite Awards. The 2022Business Elite Awardswinners were hand-picked by SME News’ indus- try experts and are based on compre- hensive analysis and research under- taken by the wider group, providing a showcase of the very best companies in each respective field awarded on merit, not popularity. This recognition follows the award of 'Best Credit Reference Agency 2021’ from last year’s Business Elite Awards, and continues LendingMetrics’ estab- lished presence as an industry-leading business who are moving from strength to strength. They were recently recognised as a ‘Premier Power Company 2022’ for the Credit & Collections Technology Awards Company Power List, topping their previous year’s performance by moving up the league table to the number one position, and ‘ Credit Ref - erence & Information Solution’ at the Credit & Collections Technology Awards 2021 (for the fifth year running!), among other recent accolades.

Based in the UK and Australia, Lending- Metrics has extensive experience in the field of online lending credit risk solu- tions and was even the first UK Credit Reference Agency to become fully authorised by the Financial Conduct Authority. As a result, they are proud to

have been recognised as a leading CRA and financial services provider. Find out what makes LendingMetrics a multi-award-winning company by learn- ing more about their products ADP, OBV and LMX and get in touch today!

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INSIGHT

Conferences to feel impact

Financial services’ conferences are less likely to be attended in-person as a result of the Covid-19 pandemic, a poll of the industry has revealed. Some 53% of those questioned by financial technology and data specialist LendingMetrics in an online survey said that Covid had made them ‘less likely to attend an in-person conference’, as compared to 43% who disagreed with that view and 4% who were undecided. The survey was conducted by the leading FinTech company in the run-up to the busy Spring conference season, when businesses traditionally decide on the resources to allocate to participation. David Wylie, Director of LendingMetrics,

said: ‘The pandemic has had a far reach- ing impact on our habits - for example with hybrid working - but this poll shows that it has also changed the perspective on making the effort to attend a confer- ence in-person. We’re going to have to wait and see whether this adaptation, like remote working, is going to be for the short or long term.’ Despite the poll results leaning in one direction, they still show that a large proportion of people see their views on conferences as unaffected. Whether the changing views on confer- ences are here to stay or not; now, more than ever, it is essential that the credit and financial services communities come together to discuss the pressing challenges, share opinions and identi- fy strategies to work towards a more stable future.

LendingMetrics launches new website The financial services provider is proud to unveil a brand new website, which has been purpose built by the LM team to better demonstrate the capabilities of the company's products, with improved interactivity, speed and mobile experience.

See it now!

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VIDEO

A banking data revolution Find out how the revolutionary bank statement data platform by LendingMetrics can help you make better lending decisions today!

Frequently Asked Questions What can OBV do? OpenBankVision provides fully categorised bank statement data, in real-time. It can confirm salary to bank account, and produces reports that allow you to analyse your customers’ spending habits. Using OBV, you can see first-hand what the customer earns and spends, and spot problems such as trou- blesome gambling habits. Can I customise the customer journey? Absolutely. Alongside our standalone version, we also offer an integrated option that is fully customisable to your brand- ing. This means your consumer journey will be as smooth as possible.

How can OBV improve customer relationships? Adopting Open Banking as a more trusted gateway is result- ing in more positive relationships with customers, who must give consent for access to be granted, thus resulting in increased trust and maintained customer loyalty. Can OBV predict the future? Unfortunately not, but it can allow you to analyse your cus- tomers’ spending habits and flag up any recurring problem spending. The award-winning platform comes with a decade of credit risk decisioning experience, which means we know how to provide the right bank transaction data.

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