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can afford yesterday, is not necessar- ily what they can afford today when their circumstances are more prone to change. With this in mind, regulators are driving in the direction of ever more demanding tests of a consumer’s ability to satisfactorily meet their loan com- mitments without causing hardship. This will be the first period of significant economic uncertainty when lenders will have tools at their disposal to make such assessments in levels of detail previously unheard of. Real-time auto- mated access to transaction and mul- ti-bureau data will enable recalibration to take place from one second to the next. Furthermore, the technology will make loan book management a far more exact science. Lenders can tap into data feeds that, when authorized, can be used to automatically track spending habits and pre-warn underwriters when borrowers are on course to miss pay- ments. A single pre-emptive telephone call while the borrower is still able to meet their commitments can be used
to reschedule a loan, rather than the usual situation of having calls ignored after they fall into arrears. In general, lenders will have access to data and analysis that will guide them to making optimal decisions, both in terms of new and existing business, and in terms of regulation… Tools that they would only have been able to dream about twenty years ago.
Plug-and-play automated platforms, such as LendingMetrics' ADP and LMX , enable lenders to precisely calibrate the level of risk they are willing to take with every single applicant. A risk that they can scale up, or down, according to the changing environment. And, because they can take a granular view of each applicant and obtain a real-time insight into their activity, lenders are less likely to make poor lending decisions. Ideally, the turbulent times we are enter- ing require lenders to be able to recal- ibrate their affordability assessments for individual applicants on a quick and constant rolling basis. What someone between higher interest rates, testing economic times, and the incidence of late payment and default" "There is obviously a well-established link
Above: LendingMetrics' Commercial Director David Wylie
www.lendingmetrics.com
Metrics Monthly | 23
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