That is a guest post from Richard Eldridge (co-founder and CEO of Lenddo), a collaborator for this special section.
With the rise of FinTech Startups specialised in Big Data application to Identity Verification and Credit Scoring, it could be easier than ever for financial service providers to keep pace with innovation and serve their customers better and more efficiently.
Consumers in 2016 are no longer what they used to be. Highly demanding, they are now tech-savvy and experience-focused. The time they would accept to fill up application forms with 176 fields and spend close to half an hour doing it is over and large consumer-facing companies are getting left behind in the race of innovation and modernisation, as they struggle to comprehend how much their consumers’ behavior has evolved. To face the challenge of fostering an atmosphere suitable for changes, banks and other financial institutions start exploring new technologies to gain competitive insight, especially in emerging markets where the smartphone penetration is setting new trends. In the Philippines for instance, the smartphone penetration is expected to jump from 40% to 70% within the next three years. In Brazil, close to 60 million people are using new generation phones, among which 78.62% are powered by Android only. Over the last few years, the market has evolved considerably and, following recent success stories involving new type of digital data from emails to psychometric tests, Credit Risk Officers are now more open in using advanced machine learning techniques to build predictive algorithms.”
Financial technology companies such as Lenddo are now using primarily non-traditional data to deliver cutting-edge solutions to help partners scale their offers and reconnect with their hyper-connected customers. Their unique reading on behavioral variables derived from the usage one would have of a smartphone, a facebook account or an email address, allows a brand new approach on risk by clearly defining the propensity – or“character” – to pay of an individual. Financial institutions in India, Latin America or South East Asia, such as banks, credit card issuers and P2P lenders, are restructuring and streamlining their processes to better respond to an ever-changing environment. Looking at India specifically, this is a game changer for more than 635 million people who are currently unbanked, but with potentially very strong digital footprints.
While rules and regulations, both inside and outside financial institutions, can slow the process of innovation, these disruptive technologies would mainly rely on opt-in data, meaning data only available through the consent of the consumer, from Facebook or Google to provide behavioural analytics. And with results immediately returned through APIs within seconds, these companies can now create frictionless experiences for customers both in store and in mobile application. These new developments are generating many opportunities to bank the two billions of unbanked around the world, but should not be implemented without validation and management using internal credit management policies and frameworks.
Certainly nothing happens overnight, but the recent evolution observed in emerging markets shows that financial institutions are embracing more and more modernisation as a compulsory step to quickly scale and remain competitive, for the greatest benefit of the consumers.
About Richard Eldridge
Richard is the co-founder and CEO of Lenddo, world leader in social authentication and scoring technology using non-traditional data. In January 2015, after 4 years of lending, Lenddo opened, its technologies for third parties, such as banks, lending institutions, utilities companies and credit card companies worldwide to reduce risk, increase portfolio size, improve customer service and verify applicants. Before Lenddo, Richard has more than 6 years management consultancy experience with Renoir Consulting, operating across various industries and business functions in more than 8 countries. Since its inception in 2001, Richard has been known as one of the pioneers in the outsourcing industry in the Philippines, having successfully ran two outsourcing companies in the form of Summersault and Infinit-O. In addition, he is a director at the British Chamber and the European Chamber of Commerce Philippines. He received his Bachelor’s degree in Management Sciences from Warwick University in the United Kingdom.