Leveraging lending analytics is a competitive necessity

Paul Siegfried
Blog Post09/07/2016

In a recent study, TransUnion and Versta Research surveyed 309 U.S.-based banks, credit unions and consumer finance companies and found that data and financial analytics are evolving so fast that lenders are having difficulty keeping up. In fact, 66% of lenders report that data and analytics are evolving faster than their own internal capabilities. Further, 61% say the big data now available to them is overwhelming, and over half (54%) say it’s difficult to discover useful insights when there is so much data.

In the current industry environment, it could take days or even weeks for a data request to be fulfilled by in-house teams. By the time the lender receives the data, the related opportunity could be lost or the data could be too stale to make a defendable recommendation.

Consumer expectation increases daily. Risk and market analysts need to capture business insights at the speed the market demands.

All of this makes growth a challenge, and to meet that challenge lenders need:

  • Access to vast data assets to gain deeper business understanding
  • The ability to derive meaningful insights through quick and flexible visualization tools
  • Tactical-level empowerment to execute profitable strategies

Growth-leaders are using analytics tools to enable the above capabilities, which allow them to identify pockets of growth, determine if their risk policy is yielding growth, and make adjustments so they can capture available opportunities.

We believe—and insights from the study show—that advanced analytics capabilities are quickly becoming a competitive necessity, and that lenders who lack them will be at a disadvantage.

According to a recent report by Karen Massey, Senior Research Analyst, IDC Financial Insights, “Big data and analytics (BDA) is instrumental in financial services in terms of accelerating innovation, driving optimization, improving compliance, and engaging customers by using data-driven decision making.”

Our study found that 70% of lenders wish they had direct, immediate, self-service visibility into their analytics. Today’s lenders need to know how they’re performing compared to the market as a whole because the rapid pace of technology-driven commerce is causing ongoing changes.
It’s not enough to know your delinquency rate. You need to know your delinquency performance in the context of the market.

If competitors are operating on a different set of rules than you are, they may be able to capture more growth opportunities.

Seventy-three percent of lenders in our study report that their analytics capabilities, or lack thereof, affect their ability to compete in the marketplace. Virtually all (92%) respondents agree there are new or hidden opportunities in today’s market, but struggle with uncovering opportunities in a timely fashion due to massive data volume and limited resources.

Analytics is a pivotal tool for decision-making in the lending market. Lenders can leverage analytics to identify business opportunities while decreasing levels of risk due to improved views of consumer credit performance and other factors. Technology is playing an increasing role in lenders’ capability to grow their lending portfolio while mitigating risk.

Delving into vast depths of data can present an impossible task when decision-makers are either overwhelmed with too much information or lack resources to leverage data appropriately. This opens the door to a new class of cloud-based analytics services, with features that can pull real and timely market intelligence by region or type of borrower, which can be used for a wide variety of purposes, such as adapting risk and developing competitive product strategies.

Lenders reveal evolving  financial analytics demand new capabilities

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