How data can be used effectively to reshape lending?

data in lending

Lending is one area where data is providing most revolutionary changes. Lenders are increasingly using data to aid the loan origination process, both for current customers and non-customer prospects. At most lending firms and credit unions, loan officers can electronically pull up customer information including any product history with the institution before approaching a customer. Data is helping lenders in a multitude of ways including:

  • Reach the right customer with the right product
  • Make faster and more accurate credit decisions
  • Create longer and more profitable customer relationship
  • Optimize collections and reduce non-performing loans
  • Boosting loan origination process

Reach the right customer with the right product:  Anticipate customer needs proactively and identify their preferred channels. Usually customers are willing to give more personalized data, if it means more tailored services. Lenders can Identify new tailored products for different customer segments. With the effective use of data, targeted marketing methods can be implemented. Effective marketing campaigns can be designed by gauging customer sentiment based on social media interactions.

Make faster and more accurate credit decisions: Can get clear insights from data for more informed credit decisions. Structured and unstructured data can be incorporated for comprehensive credit scorecard assessment. Through this, credit decisions can be automated to make faster processing and removal of dependency on manual intervention.

Create longer and more profitable customer relationship: With the help of data customer life-time value can be enhanced by elevating services. Be the customer’s lender of choice by proactively ascertaining their need and offering relevant solutions. Firms can build Behavioral scoring models by analysing transactional behaviour of customers –recency, frequency and the monetary value over different channels

Optimize collections and reduce non-performing loans: Collection performance can be improved by taking advantage of the growing streams of real-time data, which often requires integration with third party data sources such as credit bureaus. They can keep their delinquency levels low by implementing proactive, customer-centric collection strategies which optimize collections and provide the agility to respond to new and emerging risks in the loans market.

Boosting loan origination process: Lenders are increasingly using data to aid the loan origination process, both for current customers and non-customer prospects. Data-savvy lenders are now supplied with property and borrower data which allows them to better understand the customer’s situation. Loan officers can electronically pull up customer information including any product history with the institution before approaching a customer.

Today, data-driven-lending, made the whole loan origination cycle simpler, faster and more convenient to the users. The biggest change is that borrowers no longer need to have personal contact with a representative to get service. It all starts online, where they can compare lending options and then they can head over to the lender’s website to fill in an application. As for the approval process, it was reduced to a minimum.

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