COMMENT
The Holy Grail for lending
David Wylie, Commercial Director of LendingMetrics, considers the challenges lenders face with a multi- bureau approach to assessing affordability, and one potentially game-changing solution. Ask any mortgage or credit provider to name their top ten customer origi- nation challenges and you’ll find these answers featuring prominently: • Conversion rates: Am I sourcing enough suitable applicants who complete the onboarding journey? • Cost of acquisition: How much am I paying for leads and how many credit searches am I running? • Treating Customers Fairly: Am I making the right decision for each customer? None of these examples should come as a surprise to anyone familiar with the online onboarding world. After all, lead brokers have been driving growth and innovation in this market for years, expecting lenders to respond quickly and in real time to the leads on offer. With capital to deploy, lenders require a steady and scalable stream of appli- cants to assess as quickly, cost effec- tively and diligently as possible.
"With the right technology in place, both parties can deliver a seamless cus- tomer experience" As interest rates rise alongside the spi- ralling cost of living, the logical expec- tation is that demand for credit will increase, making speed and scalabil- ity as important as ever. But as these factors fuel demand, so too will they add to the credit risk and therefore require robust underwriting decisions. With the right technology in place, both parties can deliver a seamless custom- er experience. In order to quickly execute vigorous and compliant lending and affordability decisions, Open Banking has - without
doubt - begun to play a more important role each year, and this trend is set to continue. However, Credit Reference Agency (CRA) data is, and will likely remain for the foreseeable future, the most effective and reliable means by which to assess an application for credit. CRAs therefore perform a critical function for lenders. Credit reference data though, is not perfect and none of the major CRAs would claim otherwise. There is the issue of coverage: no single CRA has a credit file on 100% of the UK adult pop - ulation. Moreover, no single CRA has 100% knowledge of every one of the consumers for whom it holds a credit file. Why is this?
10 | Metrics Monthly
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