Weeding out fraud and mitigating risk is never simple but using multiple data sources intelligently and efficiently can drive better decisioning.
In the wake of last month’s Credit Awareness Week, there has been an increased focus in making inroads into the section of the population excluded from the financial system through thin credit files. These people have little or no financial history on which potential lenders can base a decision.
As such, they find credit extremely difficult to access, and when they do, they face higher prices in order to offset the potential risk lenders face.
However, the greater breadth and depth of data available can certainly help in this regard. Open Banking, rental and utilities information can all help build up a picture of a customer’s affordability position and their propensity to pay. Additionally, when multiple, non-financial data sources are used in a holistic manner, a fuller understanding of a customer’s overall position in terms of risk, fraud, affordability/vulnerability can be arrived at.
As machine learning and AI decisioning develops, the richness of data from these channels – and others including device information and social media – will be incorporated and fed into the process, allowing the implementation of rules that not only drive better decisions but help reduce the overall cost of information used through smarter application of data sources.
This broad data view is already available to decision makers and can provide an in-depth decision in an extremely short period of time via API gateways that reach out and return data from multiple sources.
Away from credit decisioning and onboarding, this wider, richer data allows fraudulent individuals and transactions to be identified more readily. Fraud is an ever-evolving issue that is constantly challenging financial services and other industries to keep abreast of to prevent.
There are multiple data vendors and niche fraud solutions providers that, when viewed as a whole can start to solve the overall problem. Data-agnostic gateways, utilising a single API link to multiple vendors, provide a complete and accurate view of the consumer and the transaction. In this way, anomalies can be spotted that point towards fraudulent payments.
The Optimize platform that Pay360 has developed allows companies to seamlessly connect to over 65 data vendors reducing the IT burden through a single API link, feeding into our decisioning platform to help businesses increase customer acceptance rates, protect against fraud and deal with the complexity of verification and identity requirements driven by multiple touchpoints.
Access to multiple data sources is only part of the solution – creating flexible rule sets by leveraging intuitive rule building capabilities that incorporate existing customer information and a consolidated manual screening and investigative tool means you can always have complete and immediate control to mitigate risk in just a few clicks.
Rules and policies can be deployed (and conversely ‘hidden’) in minutes and revised criteria applied meaning you can react to events immediately. Rules can even be applied in the background of the live system to test scenarios and outcomes to understand what their potential impact might be.
Preventing fraud will have a profound impact on the bottom line - in the first year of a well-known transport business going live with Optimize, almost £4m-worth of fraud was spotted and prevented.
Risk and fraud decisioning can no longer rely wholly on traditional data and vendors to stop criminal behaviour – the threats are simply too varied and evolve too quickly.
Instead, business must take a more agile approach and seek a fuller view of customers by taking in multiple sources and solutions.
A joined-up approach to data and subsequent decisioning can have distinct benefits for business, but what it also shows is that there are many positive outcomes for consumers as those previously excluded from the system or left with very limited options are included more readily.