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Blog: The Growing Threat of Fraud in Auto Lending and How to Combat It

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The Growing Threat of Fraud in Auto Lending and
How to Combat It

How intelligent decisioning can keep you ahead of fraudsters

As fraud continues to increase in the automotive industry, the impact it has on financial services providers and vehicle buyers is significant. Thanks to the high-value transaction of car buying, and a growing shift towards digital loan applications, fraudsters are finding increasingly sophisticated ways to exploit vulnerabilities in the system. And it’s working for them – automotive fraud is up by more than 50% this year versus last year. Auto lenders are caught in a high-stakes environment, forced to balance the need for instant loan approvals and seamless customer experiences with robust risk management and fraud prevention measures.

This need-for-speed in application processing, driven by consumer expectations and mounting competitive pressure, can create gaps that fraudsters are ready to exploit – putting your financial stability, profitability, and industry reputation at risk. So we’re looking at common fraud schemes, the impact fraud has on the auto industry, and actionable insights for technology-driven solutions that can help you combat fraud in an increasingly digital, high-risk world.

Why is fraud so prevalent in auto lending? There are several factors that make auto financing an appealing target for fraudsters:

  • High-Value:

    Auto loans tend to be high-volume and high-value, meaning successful scams can yield substantial financial rewards.

  • Consumer Demands:

    Today’s digitally-savvy consumers have high expectations of fast loan approvals and frictionless experiences. When same-day decisions are expected, lenders face pressure to prioritize speed over robust risk mitigation measures, creating gaps for fraudsters to slip through.

  • Digital Transformation:

    Further to consumer demands, the ongoing shift to online/digital applications exposes lenders to more sophisticated (and very rapidly evolving) digital fraud schemes, including identity theft and synthetic IDs.

  • Economic Uncertainty:

    Fluctuations in vehicle prices, interest rates, inflation, and economic instability often results in desperation and opportunism, prompting both professional fraudsters (including organized crime rings) and financially strained individuals to engage in fraudulent activities.
It’s a perfect storm, making the automotive industry as a whole, and in particular lenders/financial services providers, increasingly vulnerable to fraud.
The Many Faces of Auto Lending Fraud – And Their Impacts
Fraud in the industry takes on many forms, each posing unique challenges to lenders – and requiring unique tactics to fight it. But what these schemes show is that the complexity and evolving nature of fraud requires advanced detection and prevention measures.
  • Application/First-Party Fraud: Where individuals use false identities or fabricate employment/income info to qualify for loans they wouldn’t otherwise be approved for. Fraudsters might fabricate pay stubs or employers, making it challenging for lenders to verify legitimacy of loan applications. Nearly 80% of all auto fraud cases involve first-party fraud.
  • Synthetic Identity Fraud: Even more insidious (and on the rise – there was a 400% increase in synthetic ID fraud in the automotive industry this past year), synthetic ID fraud involves creating entirely new identities, combining real and fictional info (i.e. mixing a real Social Insurance/Social Security number with fake personal details). Synthetic IDs often have clean credit histories, making them difficult to flag and enabling fraudsters to secure significant loans before disappearing.
  • Dealer Fraud: Dishonest car dealers can collaborate with fraudsters, inflating the price of vehicles or falsifying loan documents to secure higher financing amounts, leaving lenders at risk when the loan defaults
  • Title Washing: This involves the alteration of a vehicle’s title to hide its history of accidents or salvage status – misleading both lenders and potential buyers and making a car appear more valuable than it actually is.
  • Re-Vinning: Involves removing the original Vehicle Identification Number (VIN) from a stolen vehicle and replacing it with a counterfeit VIN from a legally registered vehicle; disguising the stolen vehicle’s true identity and allowing fraudsters to sell/register it without suspicion.
  • Loan Stacking: When individuals apply for multiple auto loans simultaneously, often across different lenders. Securing multiple loans before credit bureaus or financial services providers have time to update records means that fraudsters can walk away with several financed vehicles, leaving lenders on the hook to recover losses.
The impacts of fraud affect financial institutions and the broader automotive industry with significant consequences for both lenders and consumers, including:
  • Financial Losses: Auto lenders and financial services providers collectively lose billions of dollars annually (estimated at nearly $8 billion in 2024) thanks to fraudulent activities. This affects profitability of course, but also creates a ripple effect with higher interest rates and less favorable loan terms for consumers as lenders try to offset their risk.
  • Operational Strain: Detecting, investigating, and managing fraud cases can require substantial resources (human and financial) and a large time investment. This can lead to inefficiencies in day-to-day operations of your business, diverting attention from core business functions.
  • Reputational Damage: Fraud incidents can erode consumer trust and loyalty, and expose lenders to regulatory scrutiny, tarnishing brand image and leading to further financial and operational repercussions.
  • Market Impact: Widespread fraud can contribute to inflated vehicle prices and exacerbate loan risk concerns, deterring both lenders and buyers, leading to declining car sales and impeding market growth.
Combating these challenges requires a concerted effort from the industry as a whole to implement proactive, efficient fraud prevention measures – and ensure the integrity and profitability of your business.
Staying Ahead of Auto Fraud: Best Practices and Solutions
A multi-pronged approach that combines advanced technology, collaboration, and strategic best practices is key to effectively combat the threat of fraud while still balancing operational efficiency and customer satisfaction.

  • Advanced Data Analytics:

    Leveraging data-driven insights is essential in early detection of fraud. Advanced data analytics tools can flag unusual application behaviors (discrepancies in reported income, recurring patterns linked to synthetic IDs, etc.). Analyzing vast datasets allows lenders to identify even the must subtle indicators of fraud that would be difficult to catch through manual reviews, enabling you to more effectively minimize potential losses.

  • Identity Verification Tools:

    Modern IDV tech plays a crucial role in authenticating applicant info. Tools that use biometrics, document verification, and cross-reference with government databases help ensure applicants really are who they say they are. These tools help auto lenders avoid false positives, improving the accuracy of fraud detection and maintaining a frictionless approval process for genuine customers. This allows you to significantly reduce fraud risks, while still supporting a satisfying customer experience.

  • Fraud Detection Software:

    Integrated fraud risk decisioning software helps you streamline and strengthen fraud prevention measures through automation. Incorporating real-time decisioning and machine learning models that can adapt to evolving fraud tactics allows you to detect anomalies instantly and automate repetitive tasks, helping lenders save time and resources. This boosts overall operational efficiency, allowing your teams to focus on higher-value, more strategic tasks while maintaining compliance with relevant regulations.

  • Cross-Industry Collaboration:

    Sharing fraud intelligence and best practices with other lenders and financial organizations in a variety of verticals can help everyone stay informed of new fraud schemes and threats. Cooperation greatly strengthens defenses and ensures a proactive approach to emerging fraud tactics, allowing you to stay one step ahead.

  • Continuous Monitoring:

    Effective fraud prevention doesn’t stop at the application stage. Continuous monitoring of loan portfolios and borrower behavior can help you detect fraudulent activity across the customer journey before it escalates. Monitoring tools that use AI to analyze account patterns and identify signs of fraud helps you protect your business, maintain customer trust, and ensure longer-term financial health.
Key Capabilities to Consider in Fraud Solutions
When selecting fraud detection tools, look at prioritizing the following capabilities:
  • Real-Time Decisioning:
    Instant assessments to flag potential fraud before loan approvals and minimize false positives
  • Machine Learning:
    Adaptive models that learn from fraud attempts to refine detection methods
  • Automation:
    Tools that streamline application processing and fraud checks to improve efficiency and reduce manual workload, while ensuring compliance with relevant regulations

  • Seamless Integration:
    Software solutions that work seamlessly with existing systems to enhance your current fraud prevention methods – and ensure a frictionless customer experience
Future-Proofing Your Fraud Strategy With Provenir

Investment in the right technology is key to a successful, proactive approach to fraud and risk management. The foundation of future-proofing lies in adopting scalable, cloud-based solutions that are capable of adapting to changing fraud threats. Cloud-based platforms offer you flexibility and real-time updates, while AI-driven tech enhances fraud detection by rapidly and accurately analyzing large datasets to identify subtle, complex patterns that can otherwise slip through the cracks. And advanced AI tools will continuously learn from your fraud decisions, allowing you to refine fraud detection processes and stay ahead of fraudsters.

Provenir’s AI-powered fraud solutions offer you:

data

Data Orchestration

Bring your own data or connect to one of our market leading partners using Marketplace integrations

icon-decisioning

Decisioning

Real-time assessments, advanced analytics tools, and machine learning models to deliver intelligent fraud decisioning flows

icon-documents

Case Management

Streamlined referral handling and frictionless investigations

decision intelligence

Decision Intelligence

AI-powered insights to understand and optimize strategy performance

Striking a balance between fast loan approvals and thorough fraud checks is essential. Integrating automated systems for real-time decisioning while maintaining robust case management for complex cases is key, alongside orchestrating data effectively and leveraging intelligent insights for faster, more accurate fraud decisions. By embracing advanced, scalable decisioning technology, you can fortify yourself against both current and future fraud threats – boosting operational efficiency, ensuring security and compliance, and delivering your customers a seamless, secure experience in their automotive journey.

Discover how Provenir’s robust fraud solutions can optimize your auto lending strategy.

Learn More

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Blog: Election Economics

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Election Economics: How to Navigate Risk Decisioning in an Uncertain Political Landscape

How Political Outcomes Shape the Future of Lending and Financial Services
Elections are pivotal moments that shape the direction of the economy, often driving shifts that reverberate across industries, including financial services. The outcomes of national and regional elections will directly influence fiscal strategies, regulatory frameworks, and economic policies, which then impact interest rates, inflation, the employment landscape, and overall market stability. And of course, all of these factors are critically important to the world of financial services, where things like credit decisioning, fraud threats, risk management, and lending practices all depend quite heavily on the broader economic environment. Recent elections in the UK and Argentina have already demonstrated how shifts in political leadership drive significant economic policy changes, and of course, the highly contentious upcoming Presidential election in the US looms as a tipping point that will have influence across the globe. As these political events unfold, financial services providers need to remain agile, proactively adjusting to new realities to ensure stability (and profitability) amidst change.
Recent Elections and Economic Impact on Lending and Financial Services

Recent elections around the world have already triggered significant economic shifts, with far-reaching implications. In the UK General Elections in 2024, results have further shaped the ongoing Brexit process, influencing fiscal policies and regulatory frameworks that directly impact the financial industry. Uncertainty surrounding post-Brexit trade deals and regulatory realignment has already affected interest rates and inflation, creating tighter credit conditions for both consumers and businesses. And adjustments to the Bank of England’s interest rate policies or regulations governing financial institutions could further influence lending practices, with tighter borrowing conditions on the horizon for both individuals and small businesses.

In Argentina’s 2023 Presidential Election, a shift in leadership has brought about changes in economic strategy, particularly in the battle against soaring inflation. The new government’s attempts to control inflation and stabilize the economy are affecting the country’s monetary policy, leading to higher interest rates and tighter lending criteria. For financial institutions, this poses significant challenges, requiring lenders to quickly adjust their credit decisioning processes to accommodate economic instability. As inflation persists and the cost of borrowing rises, both consumer credit and business financing have become more difficult to secure, which further strains the economy.

The India General Elections earlier this year have also had effects on the fintech space. The results will influence regulatory policies surrounding fintech growth and digital finance, both of which are necessary for encouraging financial inclusion in underserved markets. Depending on the government’s support for these sectors, lending to traditionally underserved segments of the population could see either significant growth or stagnation. And changes in policy around digital finance could encourage new forms of lending, but they could also introduce more stringent regulations that will make access to credit much more challenging.

The 2024 US Presidential Election: A Global Ripple Effect

Of course top of mind these days, regardless of your location, is the upcoming US Presidential election. While it’s always something that has far-reaching effects, this year’s highly contentious ballot is poised to have sweeping global implications, on everything from global interest rates and inflation trends, to significant policy reforms on taxation, regulation, and lending practices. A key player in this process is the Federal Reserve, which closely monitors election outcomes and adjusts interest rates accordingly. If the newly-elected government pushes for changes in fiscal measures, the Federal Reserve’s response could shape borrowing costs, which in turn improves or challenges access to credit. For lenders and financial services providers, these shifts showcase how important it is to remain agile in the face of uncertain regulatory reforms and fluctuating market conditions. The global financial system will be watching closely as the election unfolds – because no matter who wins, there is bound to be significant changes that will reshape lending dynamics in the US and beyond.

Election-Driven Economic Currents: Navigating Interest Rates, Inflation, and Risk Decisioning

Election outcomes can cause shifts in all sectors of the economy, but some areas in particular directly impact lending and risk decisioning. One of the most immediate effects is on interest rates, which are often adjusted based on fiscal policies introduced post-election. As interest rates fluctuate, lenders have to reassess risk profiles and adjust their credit and risk decisioning processes to account for any potential volatility in repayment abilities of their customers. Inflation control is also directly linked to post-election economic strategies. Any policies that either stimulate or dampen the economy can lead to varying levels of inflation – which affects everything from consumer purchasing power and household debt to business investments and the stock market. Inflation can also erode creditworthiness, with rising prices and an increased cost of living making it harder for both individuals and companies to manage their debt obligations. This means that lenders are then faced with the challenge of adjusting lending practices to maintain profitability while managing increasing risks in their customer base (which requires systems and solutions that enable flexibility in decisioning processes).

The outcome of any election also influences overall creditworthiness as economic conditions shift in response. Changes in the employment rate, business investments, interest rates, and fiscal stability all contribute to changes in credit and risk profiles. This is where a more dynamic approach to risk assessment is critical, with the ability to leverage intelligent, proactive risk decisioning solutions. Using advanced decisioning technology and data analytics allows financial services providers to adapt easily, identifying risks earlier and making more informed decisions. This proactive approach enables lenders to protect their profitability and lending portfolios while still serving the needs of customers effectively.

Ahead of the Curve: How Advanced Risk Decisioning Solutions Mitigate Volatility

With elections comes uncertainty. And when there’s uncertainty, financial services providers need to proactively navigate shifting risk. Advanced risk decisioning solutions play a key role in helping you better predict (and respond to) risk, by leveraging real-time data and AI-driven analytics to identify emerging trends earlier and make smarter, faster risk decisions. Rather than simply reacting to sudden market fluctuations, proactive decisioning allows you to better predict future scenarios, preparing for possible fluctuations in interest rates, inflation, credit conditions, ability to repay, etc. Remaining agile and competitive is key to staying ahead of any uncertainty in the economy – election-driven or otherwise.

Holistic risk decisioning solutions also ensure a smoother onboarding process, with the ability to more accurately assess creditworthiness, even among rapidly changing market conditions. AI-powered decisioning software and solutions allows you to access and integrate vast amounts of data (everything from economic indicators and market trends to individual financial behavior), giving you a more accurate (and nuanced) view of a customer’s unique risk profile. Too often when economic conditions are volatile, the inclination is to be overly cautious. But that can stifle your business growth. With more proactive, agile decisioning, your lending portfolio remains stable (and profitable) even when external conditions aren’t.

Fraud prevention also becomes a key focus. During periods of political and economic uncertainty, fraud attempts often surge. With a holistic, data-driven approach to your risk decisioning, advanced algorithms and embedded intelligence can better detect unusual patterns and behaviors that signal fraudulent activity. Integrating fraud detection directly into the risk decisioning process allows you to greatly reduce losses, ensuring your operations remain secure, compliant, and resilient even among the unpredictability of major election upheaval.

Beyond onboarding, there is also the issue of managing ongoing customer relationships and maximizing value across the lifecycle. Ongoing account management is particularly important during periods of economic uncertainty. Advanced risk decisioning solutions empowers you to continuously, proactively monitor customer profiles and make adjustments easily. A flexible solution allows you to adjust credit limits and lending terms in real time as economic factors like inflation, interest rates, and consumer behavior evolve. Using AI-driven tools to track changes in individuals as well as broader market trends allows you to proactively mitigate risk, reducing the likelihood of defaults while maintaining a positive customer experience through personalized, flexible financial products and services.

Despite proactive, agile efforts to effectively manage your risk, post-election downturns are common, leading to increases in default rates and placing added pressure on collections and recovery strategies. Sophisticated (and more productive) collections treatment strategies are made possible with intelligent data and decisioning solutions. Leveraging advanced risk decisioning software allows you to segment delinquent accounts based on risk profiles, prioritize collections efforts, determine the best communications channels, and tailor recovery efforts to individual borrower profiles. Best of all, it allows you to anticipate defaults before they happen by closely analyzing customer behavior and economic trends to forecast likelihood of repayment, enabling you to approach debt recovery proactively and strategically. A more proactive approach not only helps to mitigate losses, but also supports a much more empathetic and effective recovery process, ensuring long-term management of your customer relationships.

Preparing for Election-Driven Economic Shifts in Financial Services

Intelligent risk decisioning solutions are key to staying ahead of post-election shifts. By incorporating AI and advanced data analytics in one holistic platform, these decisioning solutions enable you to:

  • Forecast and proactively mitigate potential risks
  • Make data-driven lending decisions
  • Improve onboarding processes
  • Reduce customer friction
  • Manage customer risks and relationships across the lifecycle
  • Detect and prevent fraud
  • Prioritize collections efforts
  • Adjust lending practices with ease
  • Continuously monitor the economic environment

Financial services providers that adopt forward-looking, proactive strategies (and which are armed with the right technology) will prove more resilient, positioning themselves for sustainable growth even in the face of political and economic change. Are you ready?

Discover how Provenir’s single decisioning platform offers you stability across the customer lifecycle.

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Digital Banking All-Stars: 15 Key Players Impacting Your Banking Experience

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Digital Banking All-Stars: 15 Key Players Impacting Your Banking Experience

Digital Banks: Leading the Charge on Speed, Convenience, and Personalization
In a world where smartphones have become central to everything (from social connections and work tools to entertainment and GPS systems), digital banks are stepping up as game-changers for financial services. Long gone are the days of waiting in line at your local branch – instead, we have digital banks that focus on speed, convenience, and putting you in control of your money like never before. This new breed of banks isn’t just transforming our everyday financial transactions, but setting a benchmark for customer experience in the financial sector. In this round-up blog, we’re highlighting 15 digital banks that are leading the way, showing how tech-savvy banking can be both innovative and empowering.

  • Revolut: Launched in 2015 in the UK, Revolut quickly became one of the most recognized digital banks globally. Originally offering currency exchange services with low fees, the company has since expanded into a full-fledged financial super-app, providing its customers with everything from personalized budgeting tools to cryptocurrency trading. With over 45 million users worldwide, Revolut focuses on innovation and customer-centric solutions, making it a top choice for consumers.

  • Monzo: Another UK-based digital bank, Monzo has impacted the world of personal finance, offering features like real-time spending notifications, savings accounts, and fee-free foreign transactions. With a community-driven development approach, the company uses customer feedback to directly shape the product roadmap and future features. Monzo prioritizes transparency, ease of use, and financial education for its 10+ million customers.

  • sofi

    SoFi: Short for Social Finance, SoFi began in 2011 with a mission to help students refinance their loans. But today it has grown far beyond that, offering a diversified financial platform that provides everything from personal loans and mortgages to investment services and credit cards. Based in the US, SoFi serves a variety of types of consumers, many of whom are younger professionals seeking a more modern banking experience. The company prides itself on addressing the financial needs of its members at every life stage, with personalized products and educational resources that empower consumers to make more informed financial decisions.

  • Comun: A digital bank designed specifically for the immigrant Latino community in the United States, Comun aims to provide financial services that are accessible and relevant to the needs of this typically underserved population. Offering bilingual support, fee-free accounts, and tools to help users build credit, Comun is filling a critical gap in the financial services landscape. With a deep understanding of its customers, the organization is able to provide culturally relevant solutions that foster financial inclusion and empowerment, enabling social mobility for immigrants and their families.

  • Chime: One of the most popular digital banks in the US, Chime is known for its commitment to helping consumers avoid the pitfalls of traditional banking fees. No monthly fees, overdraft fees, or minimum balance requirements endears Chime to millions of Americans looking for a more affordable, transparent banking option. With a user-friendly app, early direct deposit feature, and strong focus on financial wellness, the organization continues to challenge traditional banks to rethink their fee structures and customer service models.

  • NuBank: A trailblazer in Latin America’s fintech space, NuBank has rapidly grown to become one of the world’s largest independent digital banks with over 100 million customers. Its success lies in its ability to offer a simple, transparent alternative to the traditional complex and expensive Brazilian banking system. Providing no-fee credit cards and easy-to-use financial management tools, NuBank has empowered millions of people in Brazil to take control of their finances – and setting a new standard for financial inclusion in LATAM in the process.

  • Kakao Bank: Launched less than a decade ago, Kakao Bank is South Korea’s leading digital bank (and backed by the powerful Kakao ecosystem). With millions of users, Kakao Bank is changing banking in the region by efficiently integrating financial services into everyday digital interactions. Offering a wide range of products, including savings accounts and loans, all available through its user-friendly mobile app, Kakao Bank’s innovative integration with the Kakao ecosystem enables convenient, seamless financial solutions for its customers.

  • Mydoh: Designed with families in mind, Canada-based Mydoh specifically focuses on helping kids and teens learn about money management. Backed by RBC and launched in 2021, Mydoh offers a prepaid Visa card and an intuitive app that allows parents to assign chores, set savings goals, and track their children’s spending. With an educational approach, Mydoh empowers young users with the tools and knowledge they need to develop healthy financial habits from an early age – and helps to bridge the financial literacy gap among youth in Canada.

  • TymeBank: South Africa’s first fully digital bank, TymeBank has quickly become a prominent player in the African fintech landscape. With a mission to make banking more accessible and affordable for all, TymeBank offers a no-fee, easy-to-use banking experience through its mobile app and partnerships with local retailers for physical banking touchpoints. Focusing on financial inclusion, especially among the underserved populations, its impact is significant, driving innovation in the region and making banking more accessible in South Africa.

  • Bunq: Known as the “bank of The Free,” Bunq, originally founded in the Netherlands, has grown into a leading digital bank operating in 30 European countries. Offering a highly customizable banking experience, Bunq allows users to manage multiple sub-accounts, automate payments, and even plant trees with every transaction. Its success is driven by its strong emphasis on sustainability and customer autonomy, making it a popular choice among young, environmentally-conscious consumers – and challenging more traditional banks to offer greater flexibility and more ethically responsible banking solutions.

  • Kuda: Launched in 2019, Kuda is Nigeria’s first mobile-only bank, designed to offer a more accessible and affordable banking experience to the rapidly growing population in the country. Kuda has gained popularity quickly, especially among young Nigerians, thanks to its focus on easy account management and lack of account maintenance fees. By addressing the specific needs of the Nigerian market and providing innovative solutions that foster financial inclusion, Kuda is quickly challenging the dominance of traditional banks in Africa’s largest economy.

  • Liv: The UAE’s first digital-only bank, Liv heavily targets millennials and young professionals in the region. With a vibrant app that offers everything from instant account opening to budgeting tools and personalized lifestyle offers, Liv is redefining what banking looks like in the UAE. With a deep understanding of the needs and preferences of its target audience, Liv is offering a banking experience that is as fun and dynamic as it is functional – pushing traditional banks to innovate and adapt to the demands of a younger, more tech-savvy customer base.

  • GXS: A joint venture between Grab Holdings Inc. and Singtel, GXS is one of Singapore’s first digital banks, aimed at serving the needs of micro, small, and medium-sized enterprises (MSMEs) and gig economy workers. Offering tailored financial products to a base that traditional banks often overlook, GXS is able to leverage Grab’s extensive ecosystem and Singtel’s telco expertise, offering its customers a seamless, integrated banking experience. These new financial solutions serving a key target in the region are helping to support the growth and resilience of Singapore’s incredibly diverse economy.

  • Ualá: Argentinian-based Ualá is a fintech company that has quickly become a leading digital bank in the region. With a prepaid Mastercard offering, as well as a comprehensive financial management app that enables users to manage their money, make payments, and save with ease, Ualá is empowering millions of users to take control of their finances through innovative, user-friendly solutions. In a country where access to banking services has historically been limited, the company is committed to financial inclusion, contributing greatly to its resounding success.

  • Albo: One of Mexico’s most prominent digital banks, Albo aims to offer a simple and transparent banking experience to its customers. Featuring no fees and a focus on financial literacy, Albo is particularly attractive to young Mexicans who value convenience and clarity in their financial services. With a customer-centric approach, and a focus on providing tools and resources that help its users manage finances more effectively, Albo is helping to challenge traditional banking norms in Mexico and drive greater financial inclusion and accessibility.

The future runway of opportunity for digital banks is endless, with their influence only expected to grow as they continue to push the boundaries of innovation in financial services. They aren’t just redefining how we bank – they are setting the stage for a more inclusive, accessible, and customer-focused financial ecosystem globally. But the success of digital banks hinges on their ability to leverage cutting-edge technologies to deliver seamless, secure, and personalized experiences to their uses. This is where decisioning technology plays a crucial role. AI-powered, integrated credit risk and fraud decisioning solutions are essential tools that can empower digital banks to make faster, more accurate decisions, ultimately enhancing customer trust and satisfaction. The future of banking is digital, and those who embrace advanced, intelligent decisioning tech will lead the charge in shaping a smarter, more resilient financial landscape.

Discover how Provenir’s AI-Powered Decisioning Platform offers you intelligent decisioning for a low-risk, competitive edge.

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The Role of Advanced Identity Verification in Effective Fraud Prevention

Written by Tom Hidock on . Posted in Blog. No Comments on The Role of Advanced Identity Verification in Effective Fraud Prevention

The Role of Advanced Identity Verification in Effective Fraud Prevention

Unlock growth while fighting fraud with a complete identity verification solution.
  • Tom Hidock
    Director, Global Partnerships,
    GBG IDology

Preventing fraud and building trust with customers has evolved over the years. The global market recognizes this and views customer trust and security strategically, with 65% of businesses indicating that identity verification and fraud protection activities are differentiators that can drive revenue.

GBG IDology has an extensive history of tracking fraud data, which gives us a unique perspective on trends not seen elsewhere in the market. Our latest Global Fraud Report: 9th Edition explores customer experience and fraud prevention in the age of artificial intelligence The report’s insights are significant for businesses trying to stop new types of fraud while making things easier for their customers.

These insights show that companies must instill trust along the customer journey. Achieving this means using an identity verification platform powered by onboarding intelligence, cross-industry expertise and enhanced data sources to quickly and responsibly verify identities.

Rethinking Digital Identity Verification

So, how can businesses do more with less data and deliver seamless digital experiences that exceed customer expectations without increasing the risks of fraud?

The solution lies in rethinking digital identity verification (IDV). Meeting modern demands requires digital identity verification that can:

  • Look across multiple data sources. Over 50% of companies reported an overall increase in fraud across mobile, online, contact centers, and in-person channels. As fraudsters continue to exploit an interconnected system of online and offline channels, a holistic, layered approach to IDV is essential.

    A solution utilizing diverse sets of enhanced data sources can quickly verify consumer identities without excessive data collection. By analyzing less invasive information like IP addresses, phone numbers, and email addresses, companies can conduct ‘soft’ KYC checks to evaluate risk.

    When these solutions are a part of a greater verification strategy, businesses also gain detailed feedback on identity checks. Incorporating additional solutions such as biometrics-based verification and documentation authentication ensures businesses have more inclusive ways to deliver the right verification experience at the right time. This layered approach provides transparency into onboarding decisions needed to meet compliance checks and regulatory needs, without adding unnecessary friction.

    A recent success story illustrates the power these solutions can have. A business came to GBG IDology looking to overcome increasing customer acquisition costs. After effectively implementing the right solutions for their needs, the client was able to conduct thorough risk assessments and customize journeys for new clients. This resulted in a 5:1 return on investment and allowed the client to convert more leads, accelerating loan approvals without increasing friction or fraud, which also resulted in increased cost savings.

  • Offer visibility into cross-industry intelligence. Fraud moves between industries and across borders indiscriminately, specifically synthetic identity fraud (SIF). Moreover, our recent fraud report found that 74% are concerned about the potential for SIF to increase.

    An extensive cross-industry network enables different institutions to benefit from fraud data and learnings elsewhere in the ecosystem, securing the whole network more effectively.

    Utilizing cross-industry intelligence amplifies real-time fraud intelligence between companies in the network anonymously, giving companies insight into fraud threats trending in other industries.

    Firms can then build a complete fraud intelligence ecosystem, empowering them to make smarter decisions faster about identities. With deeper, cross-industry onboarding intelligence, companies can identify trusted borrowers while adding step-up authentication to those needing an extra touch.

  • Combine AI with human fraud expertise. With its ability to scrutinize vast volumes of digital data quickly, AI can automate the discovery of threats for faster, enhanced decision-making, but it’s not foolproof. Business leaders reported generative AI to be the biggest trend in identity verification over the next 3-5 years. When asked why, leaders cited the tech’s potential to create more accurate synthetic identities, increase the volume of phishing/smishing and generate more convincing fake IDs.

    Additionally, AI alone can’t provide the transparency companies need to explain to regulators why a decision was made, produce an auditable trail showing policies were followed during onboarding and better train the machine learning models that power it.

    The combination of AI and human fraud expertise eliminates these issues. Fraud analysts provide oversight and closed-loop transparency for continuous improvement and optimization. Fraud analysts are also invaluable in providing first-hand, expert insight into the fraud they’re seeing in the marketplace and best practices for preventing it in the future.

Trusted intelligence to unlock growth

This balance of security and convenience remains the ultimate challenge, beginning during onboarding. Layered identity verification solutions are a critical technology that can empower firms to evaluate consumer risk while staying competitive. With the right solution in place, companies can deliver a seamless and secure borrowing experience that builds trust and leads to loyalty for long-term growth.

Check out IDology’s Global Fraud Report: 9th Edition to gain more insights into building trustworthy customer journeys that keep fraud out.

Discover how Provenir’s AI-Powered Decisioning Platform can enable more accurate fraud detection.

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Lending Affordability and Regulations in the Nordics: Navigating Rising Debt and Consumer Protection

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Lending Affordability and Regulations in the Nordics: Navigating Rising Debt and Consumer Protection

The Nordic countries—Denmark, Finland, Iceland, Norway, and Sweden—have long been celebrated for their stable economies, strong social safety nets, and sound financial systems. However, rising household debt and escalating housing costs are placing increasing pressure on lending affordability, prompting regulators to implement stricter controls to ensure responsible borrowing and protect financial stability. Adding to these challenges, global economic factors such as inflation, interest rate hikes, and geopolitical tensions are significantly impacting the Nordic lending market.

As a result, Nordic borrowers are finding it increasingly difficult to manage their debt and maintain affordability. Household debt has surged across the Nordics, especially in Sweden, where the debt-to-income ratio has surpassed 150%. Many consumers are now struggling with higher mortgage payments, causing regulators to step in.

Consumer Loan Restrictions

Nordic governments are increasingly imposing restrictions on consumer loans to protect borrowers from predatory lending and unmanageable debt, in addition to tightening mortgage regulations. Finland, for example, has capped interest rates on consumer loans at 20%, while similar actions are being implemented across the region to address high-interest lending. Each country is tackling lending affordability with distinct measures. Sweden, for instance, emphasizes amortization requirements to reduce debt levels over time, while Denmark focuses on income-based lending caps to ensure that borrowers do not take on more debt than they can afford. These country-specific approaches highlight the region’s nuanced strategies for maintaining financial stability and protecting consumers in a challenging economic environment.

Looking ahead, stricter regulations could reshape the financial services landscape in the Nordics, potentially slowing growth for lenders while encouraging more sustainable lending practices. Lessons from past regulatory cycles in other regions, such as tighter controls in the U.S. and Europe following financial crises, suggest that while short-term growth may be impacted, long-term stability and consumer trust could improve, setting the stage for a more resilient financial sector.

Exploring the Role of Technology in Affordability

But, thankfully, the rapid advancement of technology is reshaping the financial services landscape in the Nordic region, where digital lending platforms, open banking, and fintech innovations are driving significant changes in how consumers access credit. While these technologies offer unparalleled convenience and inclusivity, they also introduce complexities related to lending affordability. Are these innovations making it easier for consumers to secure loans, or are they exacerbating the issue of rising debt?

Digital Lending and Fintech: Balancing Access and Risk

Digital lending platforms and fintech solutions have made borrowing more accessible than ever. In the Nordics, where internet penetration is among the highest in the world, consumers can now apply for and receive loans entirely online, often within minutes. These platforms leverage open banking frameworks to access a wider range of financial data, allowing lenders to make more informed decisions about creditworthiness. This streamlined approach has expanded access to credit, particularly for underserved populations who may have struggled to secure loans through traditional banks.

However, this ease of access presents a double-edged sword. While consumers certainly benefit from the convenience, there’s also a risk of over-borrowing, as the simplicity of digital lending can sometimes lead to impulsive financial decisions. The seamless user experience offered by many fintech platforms can obscure the long-term financial implications of taking on more debt. For lenders, this raises the question of how to balance innovation with responsibility. Regulatory bodies in the Nordics need to closely monitor these developments to ensure that technological advancements don’t compromise financial stability.

AI in Affordability Assessments: A Smarter Way to Lend

Artificial intelligence (AI) is playing an increasingly pivotal role in refining affordability assessments. By analyzing vast amounts of data—from spending patterns to employment history—AI-driven tools offer a more holistic view of a borrower’s financial health than more traditional credit scoring methods. These tools can detect nuances that human analysts or outdated systems might miss, ensuring that lending decisions are based on a comprehensive and real-time understanding of a borrower’s ability to repay.

For lenders, AI offers the dual benefits of improving accuracy and reducing risk. By predicting a consumer’s likelihood of default with greater precision, AI-driven affordability assessments allow lenders to adjust their loan offerings accordingly. This means that consumers are less likely to be approved for loans they can’t afford, mitigating the risk of rising debt levels. Additionally, AI-powered automation helps lenders streamline their operations, reducing the time and cost associated with manual assessments.

In the Nordic region, where regulators are tightening lending criteria, AI is becoming an essential tool for compliance. Lenders can integrate AI into their decision-making processes to ensure they meet strict affordability guidelines while continuing to provide accessible credit to consumers. The use of AI also helps reduce bias in lending decisions, as algorithms are trained to assess objective financial indicators rather than relying on potentially flawed human judgment.

Danske Bank is one successful example. They’ve integrated digitalization and advanced data analytics into their lending process, which has helped the institution manage affordability risks more effectively. The bank’s “Sunday” mobile app uses AI to provide personalized financial advice, helping customers make informed borrowing decisions. Additionally, Danske Bank has implemented income-based lending caps, ensuring that borrowers do not take on more debt than they can afford while leveraging digital tools to continuously monitor customers’ financial health and proactively engage them when needed.

Looking Ahead: Strengthening Risk Management Systems

Lending affordability remains a critical issue in the Nordics, as regulators seek to balance financial stability, consumer protection, and economic growth. With rising debt levels and increasing pressure on households, regulatory frameworks will continue to evolve to ensure sustainable lending practices. As these changes unfold, lenders must prepare strategically by prioritising investments in technology that enhance data-driven decision-making and improve compliance with stricter regulations. Strengthening risk management systems will be essential for adapting to evolving market conditions, while a focus on consumer engagement through personalised, transparent lending experiences can help build trust and retention. By staying ahead of regulatory shifts and leveraging innovation, Nordic lenders can navigate this complex landscape and ensure long-term stability and growth.

By leveraging fintech innovations and AI, lenders in the Nordics have the opportunity to enhance affordability assessments and promote more responsible lending. However, they must also remain vigilant about the potential downsides of making borrowing too accessible. Balancing technological progress with responsible lending practices will be crucial in ensuring that consumers are protected and that lending remains sustainable in the face of rising debt.

Discover how Provenir’s AI-Powered Decisioning Platform can promote more responsible lending.

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Blog: The Future of Collections for Wireless Carriers/Telcos

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The Future of Collections for Wireless Carriers/Telcos

Best practices and recommendations for more efficient, personalized collections strategies

  • Authors:
    Michael Fife VP Sales & Consulting, US, Provenir
    Sam Rohde Director, PreSales, North America, Provenir
    Andy Beddoes Principal Consultant, North America, Provenir

Collections activities enormously impact the financial performance of U.S.-based wireless carriers. There are 1%-5% of all U.S. subscriber accounts in delinquency at any given time. And with over 450 million post-paid wireless accounts active in the U.S. and an average past due balance between $200 and $300, that means there are over $3 billion dollars that are past due and at risk. To combat these startling stats, wireless carriers need to take advantage of new innovations in advanced analytics and holistic, cloud-native risk decisioning solutions to execute best-practice treatments before consumers go past due. Telcos that deploy advanced analytics to get ahead of payment risks see up to a 10% improvement in recovery rates when compared to those who use legacy processes and static scorecard methods.

Adopting these newer innovations and best practices can drastically reduce operating costs within your collections functions and also increase returns on collections activities. The ease with which internal and third-party data sources can be integrated and orchestrated, and the ease with which advanced analytics can be set up, tested and promoted to production, are primary drivers of these returns on investment.

So we’re looking at exactly what these best practices are for pre-collections and collections decisioning, and what has worked for large telco organizations around the globe.

Decisioning Strategies: Best Practices for Pre-Collections and Collections

Looking at best practices from telco companies around the world reveals that a collections risk decisioning strategy for wireless carriers should consist of at least seven key components. And the platform upon which these are configured and executed must allow simple, self-service access for business users to set up, test, and deploy each component without added burden on tech teams or IT.

  • Champion / Challenger: Can you implement independent and in-stream testing of objects that execute further down in a flow? An unlimited random number generator that divides decisioning down two or more flows allows for complex testing strategies to be executed, which is important for fine tuning the impact of strategies on collected balances and is a best-practice first step.
  • Calculation of Attributes: Be sure you can enable the ingestion of internal and external data to calculate attributes such as days past due, debt-to-income, skip trace required, and other variables useful in predicting behavior and best treatments.
  • Reasons for Collections: The third critical component is being able to calculate internal data that is useful for segmentation, including but not limited to billing cycle data, promise-to-pay broken, skip trace required, and other attributes.
  • Portfolio Segmentation: Can you execute portfolio segmentation in real-time, based on the data your decision engine has ingested to determine the appropriate collections stage (early, mid, late, or more divisions) and subsequent actions?
  • Configurable Collections Stages: Ensure the creation of configurable, divided collections stages where distinct actions and treatments can be executed based on the segmentation characteristics that were executed in the previous step.
  • Scoring Models: The ability to test and deploy advanced analytics that drive the treatments are crucial to successfully increasing balances collected. These include everything from behavioral scorecards and roll-rate models, to risk grades and proposed settlement amounts, that inform the best communication channels, timing, tone, offers and other actions.
  • Treatments: Each of these previous steps lead to you being able to automatically push actions through existing communication channels (SMS, email, push notification, phone, etc.), informing the tone, the settlement offer, and other iterative actions that drive collected balances. Because not all channels elicit the best response – for example, 73% of Gen Z consumers say SMS is best for reminding when payments are past due. This is where the use of advanced analytics can help, informing the right options for individual customers.
A Configured Best-Practice Collections Decisioning Workflow

Modern, cloud-native risk decisioning solutions allow business users to administer the creation and testing of individual decisioning objects or nodes. These nodes interact with each other either concurrently or sequentially and range in complexity from simple business rules to advanced analytics, which users can then create and manage through a low-code interface to improve returns on collections activities. Additionally, decisioning software that is user friendly reduce the technical burden and operating costs of the collections function. What does this mean? In short: business users must be able to manage the end-to-end flow in both test and production environments without having to involve IT.

Here’s an example of a best-practice collections decisioning workflow, which comes from dozens of large-scale implementations thanks to the subject matter expertise of risk and collections professionals. They created this end-to-end sequence for wireless carriers to use, and it can be modified as necessary to adapt to different requirements in order to efficiently execute next-best treatments.

The workflow pictured above uses a combination of on-us behavior data, off-us behavior data from 3rd parties such as credit bureau and speciality telco data, previous contact history data, and socio-demographic data. All of these combine to build a holistic, comprehensive view of a delinquent customer, as outlined in the seven components we described.

  • On-us behavioral data includes the customer’s payment history, delinquency history, and returned checks, among other attributes.
  • Off-us behavioral data involves third-party data sources that provide insights into a customer’s financial obligations and commitments, as well as updates on their behavior based on almost real-time updates.
  • Previous contact history data is critical in learning from previous collection contact attempts and modifying the treatment approach accordingly.
  • Socio-demographic data can be used to build customer profiles to assist in selecting the appropriate channel of communication.

Leveraging these various data sources and applying advanced analytics such as random forest or XGBoost machine learning techniques to predict behavior, propose settlement amounts, and to gauge time and channel preferences allows collection teams to build a more targeted, personalized approach to collections, based on customer preferences and circumstances.

Making a significant departure from more traditional, legacy processes (which often rely on core static classifications such as days past due or single risk scores), this new approach highlights a more modern, individualized way of ensuring efficient, effective collections strategies. By evolving beyond logistic regression and decision trees to next-generation collections models that lean on machine learning (which learns from previous nodes within its model construct), the final customer treatment is much more personalized, focused on outcomes and response propensity.

Looking for an assessment of your own risk decisioning strategies for collections?

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Round-up: Top Organizations Leading in Embedded Finance

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Round-up: Top Organizations Leading in Embedded Finance

How these tech pioneers are seamlessly integrating financial services into everyday platforms

Embedded finance has quickly emerged as a game-changer in the industry, with a predicted global market size of $348.8 billion by 2029, at a growth rate of 30% CAGR from 2023-2029. By seamlessly integrating financial services into non-financial platforms, companies are able to streamline operations and enhance the customer experience, creating frictionless journeys and improving customer loyalty and retention. Major players are on both sides of the fence – both those successfully weaving financial services directly into their core offerings, and those supporting this wave of tech innovation with cutting-edge solutions and APIs that empower embedded financial services. We’re looking at both – how these industry leaders are dominating the embedded finance area and the crucial role their tech partners play in making this integration happen.

  • aliexpress
    Based in Asia, this online eCommerce platform brings together a ton of small producers who sell everything from clothing and accessories to electronics and sporting goods. Originally created by the Alibaba group over a decade ago, the website operates similarly to Amazon, but doesn’t produce anything of its own – instead its platform is a showcase for others, bringing a number of products into one site and facilitating easy payment options.
  • booksy
    Originally founded in Poland and now available worldwide, Booksy is a leading appointment management platform for wellness/beauty/health providers, allowing customers to book local appointments for haircuts, massages, and aesthetic services. With the integration of Stripe, they were able to embed payment processing directly into their app, including an omnichannel solution that allows Booksy merchants to collect payments in person, within the app, or at the time of booking, ensuring seamless payment experiences for customers.
  • uber
    The world’s favorite ride-share app, Uber offers in-app payments, ride insurance (to protect both riders and drivers), and instant drive payouts, ensuring a seamless payment experience for riders and immediate access to earnings for drivers. They’ve also expanded to offer food delivery options, as well as a variety of different ride types to appeal to a wider range of customers.
  • amazon
    The undisputed gold standard of eCommerce is Amazon, offering embedded finance in a variety of ways, including payment, lending, and Buy Now, Pay Later options. With integrated payment and finance options across a variety of global sites and sellers, Amazon enhances customer convenience and supports its wide range of sellers with quick financing and access to funds.
  • shopify
    Canadian success story Shopify simplifies payment processing for merchants in a variety of industries, offering them quick access to funding and financial management tools. Now a multinational organization with embedded offerings available on their proprietary eCommerce platform, their solutions include a variety of types of products that focus on everything from online storefronts and point of sale options, to returns management, shipping, order fulfillment, B2B, and financial management.
  • apple
    A name recognizable to the entire world, Apple is one of the pioneers of embedded financing, making Apple Pay a widely used option for everyone (read, millions and millions of people) who owns iPhones. With Apple Pay, Apple Card, and Apple Cash, they’ve integrated secure and convenient payment options directly into Apple devices (including watches), offering a frictionless payment experience for users.
  • starbucks
    The Starbucks app, which began as a way to improve customer loyalty by allowing users to earn rewards points on purchases, has quickly morphed into an extremely convenient rewards/payment system. You can reload funds to your mobile card at the click of a button, pay in-app for purchases, order ahead, earn rewards points, and then redeem them seamlessly, enhancing customer loyalty and ensuring a positive experience end-to-end for customers.
  • stripe
    An American multinational financial services company, Stripe offers a comprehensive suite of payment processing APIs and financial infrastructure for businesses, enabling organizations of all sizes to easily integrate payment services into their platforms. With millions of customers worldwide, including well-known brands like Marriott, BMW, and WhatsApp, their fully integrated payments products are used to optimize checkout conversion and launch new business models effortlessly.
  • plaid
    Similar to Stripe, Plaid works behind the scenes of some of your favorite brands, providing APIs for secure access to financial data and services that enable seamless connections between financial services and apps. Based in the U.S. but operating in a number of countries across North America and Europe, Plaid enables consumer apps to effortlessly connect with users’ bank accounts in a secure way.
  • marqeta
    Providing card issuing and payment processing technology, Marqeta is used by industry leaders in a variety of use cases, including on-demand delivery, expense management, retail, and digital banking. By enabling companies to create customized payment cards and solutions, they facilitate embedded financial services for their customers to allow them to deliver exceptional, brand-elevating customer card experiences.
  • walnut
    Providing seamless payment options for insurance premiums, along with instant, personalized insurance quotes and policy management through its online platform, Walnut Insurance is a prime example of embedded finance in the insurance industry. They offer value-added services that go beyond traditional insurance, including wellness benefits and services like access to mental health resources, directly into their platform, exemplifying the innovative use of embedded finance.
  • balance
    A platform focused on B2B trade platforms, distributors, and brands across the B2B supply chain, Balance powers the entire transaction lifecycle, with software and APIs that allow merchants and marketplaces to accept business payments, optimize AR, and extend trade credit. By focusing entirely on B2B, they’ve built a platform that incorporates all aspects of financing and payment processing to enable innovation and growth for their customers.
  • grab
    Southeast Asia’s leading superapp, Grab provides everyday services including deliveries, hotel bookings, gift cards, and ridesharing, while also embedding financial services like payments, insurance, and micro-lending. With a goal to enhance customer convenience and drive engagement, they offer services for consumers, drivers, merchants, and even enterprises – driving economic empowerment for everyone in the region.
  • mercado pago
    Based in Argentina and boasting one of the largest user bases in Latin America, Mercado Pago enhances eCommerce by integrating financial services that support seamless transactions and provide credit options to both buyers and sellers, including digital wallet, payment processing, and financing plans.
  • synchrony
    In part an online marketplace, Synchrony allows you to find deals on whatever your heart desires, and then provides you with various ways to pay, including credit cards, personalized financing offers, and Buy Now, Pay Later plans. They also offer individualized banking plans and products, financial solutions for businesses, and even healthcare financing for you, your family and your furry friends.

Companies across the globe are leading the charge in embedding finance into their services, transforming customer experiences, and driving growth. These examples (among many!) demonstrate the immense potential of embedded finance to streamline operations, enhance customer satisfaction and loyalty, and open new revenue streams. For those looking to explore embedded financing options, Provenir’s AI-powered risk decisioning solutions can enable you to integrate financial services seamlessly, manage risk effectively across the lifecycle, and deliver exceptional value to your customers.

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Embedded Finance: Enabling Seamless Financial Services

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Embedded Finance: Enabling Seamless Financial Services

Unlocking new opportunities and enhancing the customer experience
Embedded finance has been changing the way financial services are delivered, integrating them directly into everyday consumer activities. Imagine securing a loan directly from your favorite online store, or getting trip insurance coverage while booking a vacation. Many of us have utilized embedded finance services without ever having had a name for it. As more businesses adopt these integrated solutions, the potential for improved customer satisfaction, loyalty, and retention is significant – not to mention new revenue streams. We’re looking at the benefits, challenges, and future opportunities of embedded finance, offering you insights into how to leverage this trend for an enhanced competitive edge and a way to provide exceptional value to your customers.

The Power and Potential of Embedded Finance

Embedded finance, referring to the integration of financial services into non-financial platforms, is enabling businesses to offer banking, lending, insurance, and payment services directly within their existing products, whether those are applications, websites or other platforms. The trend is gaining traction rapidly, in part due to its ability to create more cohesive, seamless user experiences and streamline financial transactions. The value of embedded finance in 2022 reached $66.8 billion, but estimates put that figure at $622.9 billion by 2032, highlighting how it’s poised to become a dominant force in the industry. This growth is driven by the increasing demand for convenience and the desire for businesses to differentiate themselves in a competitive market by integrating innovative financial solutions. Companies across various sectors, from travel to retail and everything in between, are recognizing the value of creating super-apps or platforms that incorporate a variety of types of services (including financial) to enhance customer loyalty and create new revenue streams.

Uber and Shopify are just two big-name examples of organizations already leveraging embedded finance to enhance their services. Uber, the ride-sharing titan, offers instant payments to drivers, while Shopfiy allows for merchant cash advances and payment processing right in its proprietary platform. Likewise, retail giant Amazon offers its customers buy now, pay later (payment in installments) services right at checkout, and Tesla offers its car buyers insurance options, streamlining the process of getting coverage for their new vehicles. So why is embedded finance so popular?

Unpacking the Benefits of Embedded Finance

There’s a ton of benefits that embedded finance can offer to enhance your business operations and the experiences of your customers. Let’s take a closer look.

1. Flexibility
  • Adaptive Solutions: Embedded finance providers highly flexible financial solutions tailored to meet the specific needs of your customers. For example, you can offer customized lending products based on individual customer profiles, which can be seamlessly integrated into the purchases process. Adaptability like this ensures that financial services are more accessible and highly relevant to each individual customer, enhancing their overall experience.
  • Real-Time Access: A standout feature is the provision of real-time access to financial services. Your customers can instantly access loans, make payments, or secure necessary insurance without the delays associated with more traditional banking processes. This immediacy improves customer satisfaction while also increasing the likelihood of customers completing transactions and reducing cart abandonment.
2. Competitive Edge
  • Market Differentiation: In a crowded space, embedded finance is proving to be a key differentiator. Offering integrated financial services allows you to stand out from the competition, and provides you an edge over those who don’t.
  • Increased Revenue Streams: Open up new avenues for revenue generation with the integration of financial services like payment processing, lending, and insurance.
3. Enhanced Customer Experience
  • Seamless Integration: Simplify the user journey by integrating financial services into everyday customer interactions. Without having to leave an app or website to complete a financial transaction, your customers will enjoy smoother, more convenient experiences.
  • Personalization: Embedded finance allows for a higher degree of personalization, with financial services tailored based on customer data and behavior – and ensuring more relevant and appealing offers (i.e. a fitness app could offer personalized health insurance plans based on user activity levels).
Embedded finance is fundamentally changing the way businesses interact with their customers, offering unparalleled flexibility, competitive advantages, and enhanced user experiences. By embracing this trend, companies can not only meet the evolving needs of their customers but also unlock new growth opportunities.

Implementing Embedded Finance Offerings: A Step-by-Step Guide

So you’re ready to dive into the world of embedded finance and reap its numerous benefits… now what? Here are some tips to help you navigate the implementation process, from assessing business needs to choosing the right technology partner and executing a seamless integration.
Step 1: Assess Your Business Needs
  • Market Research: Conduct thorough market research to understand what exactly your customers need and what the market demands. Do your customers need more flexible payment options? Faster access to loans or insurance? Identifying precise needs will help you tailor your embedded finance offerings more effectively.
  • Internal Assessment: Take a close look at the existing capabilities you have within your business. What financial services do you already offer and what are the gaps? Conducting an internal analysis will help you determine what additional resources or technologies you need in order to successfully implement your embedded finance offering. Make sure you’re aware of strengths and weaknesses to create a more robust integration plan.
  • Define Objectives: Clearly outline what you aim to achieve with your embedded finance implementation, such as increased sales or improved customer retention.
Step 2: Choose the Right Technology Partner(s)
  • Determine Criteria for Selection: Selecting the right technology partner to set you on your embedded finance path is critical. Consider factors like:
  • Scalability: Ensure the decisioning platform you choose can grow with your business and handle increasing volumes or added complexity.
  • Security: Choose a partner with strong security measures and robust data privacy to protect customer data and financial transactions.
  • Integration Capabilities: The technology should easily integrate with your existing systems and platforms.
  • Case Studies: Look at previous examples of successful embedded finance partnerships – can your chosen tech partner offer the same seamless integration and robust experience for your customers?
Step 3: Implement Your Embedded Finance Plan
  • Develop a Roadmap: Create a detailed roadmap outlining each phase of the implementation process, including timelines, key milestones, and resources required.
  • Build a Pilot Program: Start with a pilot program to test the integration on a smaller scale and gather feedback.
  • Full Integration: Roll out the solution across your entire platform, ensuring all systems are integrated and functioning smoothly.
  • Monitor and Optimize: Continuously monitor the performance of your embedded finance offerings and make necessary adjustments to optimize the experience.

Tackling Embedded Finance Hurdles

Yes, the benefits of embedded finance are substantial. But that doesn’t mean it doesn’t come with its own set of challenges. Here are some common hurdles and the strategies to overcome them.
  • Regulatory Compliance: Navigating the complex landscape of financial regulations is most definitely daunting. Different countries and regions have varying rules and regulations governing financial services, all of which can impact how you implement and maintain embedded finance. Ensuring compliance is essential to avoiding legal issues and potential fines.

    • Stay Informed: Keep up-to-date with the latest financial regulations in the regions you operate in and be sure to engage with legal experts to understand all of the implications for your business.
    • Develop Compliance Programs: Implement comprehensive compliance programs to ensure all of your financial activities adequately meet regulatory requirements, and conduct regulator reviews and audits to maintain compliance.
    • Partner With Experts: Collaborate with financial services providers who have a strong understanding of the regulatory landscape in your region so you can navigate complex regulations more effectively.
  • Technological Integration: Integrating financial services into your existing systems can be technically challenging, requiring robust IT infrastructure, seamless data flows, and compatibility with your current platforms. And ensuring data security during integration is critical for protecting sensitive customer information.

    • Ensure Robust Infrastructure: Invest in a robust IT infrastructure that can handle the integration of financial services. This includes everything from scalable servers and secure data storage to reliable network systems.
    • Utilize API Integration: Use APIs (Application Programming Interfaces) for seamless integrations. APIs can facilitate data exchanges between your systems and financial services providers, ensuring smooth operations for your customers.
    • Implement Proper Security Measures: Utilize advanced security measures, including encryption, two-factor authentication, and regular security audits to adequately protect customer data both during and after the integration process.
  • Customer Trust: Building and maintaining the trust and loyalty of your customers is critical when you’re offering financial services of any kind. Customers need to feel confident that their data (including identity, account numbers, and transactional data) is secure and that services provided are reliable. Any incidents that breach this trust can have severe repercussions for your brand (and your bottom line).

    • Be Transparent: Be upfront and straightforward with your customers about how their data is used and the measures you have in place to protect it.
    • Provide Customer Support: Ensure you have robust customer support in place to address any concerns or issues your customers may have regarding your embedded services.
    • Perform Quality Assurance: Regularly test and update your financial services to ensure they remain reliable and secure. High-quality service delivery enhances customer trust and satisfaction.
Implementing embedded finance can transform your business, but it’s crucial to address any potential challenges head-on – and preferably before they pop up! Stay informed, invest in the right tech, and build trust with your customers so you can navigate these obstacles with ease and ensure a successful embedded finance integration.

The Future of Embedded Finance: What Lies Ahead?

As embedded finance offerings (and the tech behind them) continues to grow, the impact on various industries are becoming more profound – with trends surrounding embedded finance shifting, use cases evolving, and long-term benefits emerging.
  • Increased Use of AI: AI can enhance financial services by providing more personalized and efficient solutions, with everything from AI-driven chatbots offering instant customer support and machine learning algorithms that can analyze user to data to offer customized financial products. This level of personalization and rapid response improves customer satisfaction and engagement.
  • Expansion Into New Sectors: Embedded finance has been well-established in sectors like retail and transportation, but that’s only the beginning. Industries including healthcare, education, and real estate are exploring the potential of embedded finance solutions. Healthcare providers could offer financing options for medical treatments directly within their platforms, or educational institutions could integrate payment plans for tuition.
  • Smart Contracts: Self-executing contracts with the terms directly written into the code could make embedded finance even more accessible – automating transactions and reducing the need for intermediaries, making processes faster and more cost-effective. In real estate for example, smart contracts could help automate property sales, ensuring that all conditions are met before the transaction is completed – increasing efficiency and improving fraud screening.
  • Decentralized Finance (DeFI): By leveraging blockchain technology, DeFi enables financial transactions without traditional intermediaries like banks, leading to more decentralized and democratized financial services. This could enable peer-to-peer lending platforms to become more prevalent, allowing individuals to lend and borrow directly from each other, with embedded finance seamlessly facilitating these transactions.
  • Sustainable Growth: Organizations that adopt embedded finance can look forward to sustainable business growth. By integrating financial services, you can create new revenue streams and enhance loyalty of your customers. And offering financing options at the point of sale increases conversion rates and average transaction values, leading to higher revenues overall.
  • Enhanced Customer Loyalty: The convenience and personalization offered by embedded finance can significantly enhance customer loyalty. Access to tailored financial solutions, easily and securely, means your customers are more likely to return and recommend your services to others, resulting in a strong customer base and competitive advantage in the market.
  • Operational Efficiency: Automating various financial processes allows you to streamline operations, reducing the need for manual intervention, minimizing errors, and speeding up transaction times – leading to lower operational costs and greater efficiency. And reducing the time and resources spent on managing things that are now automated means more focus on core activities or strategic innovation.
Emerging trends and new innovations are set to further enhance the impact of embedded finance, making the future runway of opportunity long and bright. The benefits of embedded finance are clear (sustainable growth, improved customer loyalty, greater operational efficiency) – now all you need to do is ensure you have the right technology partners along for the ride.

Want details on how an all-in-one decisioning platform can enable your embedded finance offering?

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Tackling Tech Bloat: Slimming Down to Boost Efficiency, Security, and Innovation

Written by Brendan Deakin on . Posted in Blog.

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Tackling Tech Bloat: Slimming Down to Boost Efficiency, Security, and Innovation

How Major Banks and Large Financial Services Providers can Streamline their Tech Systems
Today’s technology can be both a vital enabler to progress and growth, and also a potential hindrance to efficiency. With the accumulation of outdated, redundant, or overly complex tech systems, larger financial institutions, including major banks, are feeling the pressures of tech bloat. And just like any other bloating, tech bloat is uncomfortable – hampering efficiency, escalating costs, and stifling innovation – which makes it a critical issue to address. For larger banks in particular, the urgency to streamline tech infrastructure has never been greater. With an increasingly competitive (and much more highly regulated) environment for financial services providers, eliminating tech bloat is essential to enhancing your overall operational efficiency, improving your security, and enabling your ability to remain agile.

documents

According to a 2023 survey by MuleSoft and Deloitte, large enterprises now use an average of more than a thousand applications across their organization.

So what exactly is tech bloat, and how can you slim down your stack? Read on to find out more.

The Silent Saboteur: Understanding Tech Bloat in Financial Services

Referring to the excessive accumulation of outdated, redundant, or highly complex tech systems that weigh down an organization, tech bloat in financial services is becoming increasingly common. This phenomenon stems from a variety of causes, but the biggest tends to be an abundance of legacy systems that have been patched and repurposed over the years. Of course many financial services providers require very specific needs to be addressed (including everything from core banking systems and risk assessment models, to cybersecurity software, workflow automation, customer relationship management, financial planning and forecasting, data sources, fraud and identity management, loan origination software, and payment processing). As the list of needs (and related tech) grows with your organization, so does the bloat.

But many of the software solutions you have will overlap in functionality, leading to inefficiencies in both operation and cost. A survey by Freshworks shared that “54% of IT professionals say their organization pays for software” that never gets used. And often these systems are not integrated with each other very well, creating numerous silos of information, complicating workflows, and making data access tricky. Not to mention the fact that extensive customizations and add-ons over the years, while useful at first, can quickly turn into burdens, limiting flexibility and making maintenance and updates difficult. And of course those updates are critical, because with constant regulatory shifts, financial institutions do regularly need to update their systems, which can result in a quickly tangled web of temporary fixes that, you guessed it, add more bloat (not to mention leave you more vulnerable to everything from data breaches to lapses in compliance).

Unveiling the Not-so-Hidden Consequences of Tech Bloat
Now that we’ve looked at what it is and how it starts… What impact does tech bloat really have on day-to-day operations? As it turns out, a lot – and those effects get compounded the longer your bloat hangs on.
Financial Implications: First and foremost, tech bloat significantly strains your financial resources. Maintaining and supporting any number of redundant systems is, well, redundant, leading to increasing operational and maintenance costs. And outdated systems tend to consume a disproportionate share of your budget, diverting necessary funds away from more strategic, growth-focused investments, and hampering your ability to invest in more innovative, efficient solutions.

documents

According to Freshworks, “the cost of trying to use unhelpful technology amounts to more than $84B annually in wasted time in the US alone, or $10M every hour of every day.”

  • Operational Inefficiency: A bloated tech environment slows down business processes and complicates workflows, with legacy systems and overlapping solutions creating bottlenecks. This inefficiency affects day-to-day operations, but also has a compounding effect the longer it continues, leading to longer turnaround times and a lack of flexibility and agility in your operations, ultimately adding friction to customer experiences.
  • Risk and Compliance Challenges: The more outdated systems you have to manage, the more the risk of errors, data inconsistencies, and compliance misfires increases. All financial services providers must adhere to stringent regulatory requirements, and the more bloated your organization, the more challenging it is to ensure compliance, leading to potential fines and reputational damage.
  • Security Vulnerabilities: Along the lines of compliance struggles, outdated systems are often easier prey for cyber attackers. The complexity of a bloated tech environment makes it much more difficult to implement robust security measures effectively, leaving you open to targeting by cybercriminals. Any breach (data, compliance, ransomware) can have severe consequences, including financial losses and significant damage to customer trust.
  • Innovation Roadblocks: Want a surefire way to stifle innovation? Maintaining and integrating multiple tech systems makes it extremely challenging to adopt new technologies, even if those technologies are ones you really, really want to utilize. In an industry where agility, flexibility, and continuous innovation are required to stay competitive, this hindrance to tech advancement places larger, more complex financial services organizations at a distinct disadvantage – making it difficult to explore new opportunities and deliver cutting-edge solutions to your customers.

Any of these consequences should be enough to address your tech bloat problem, but put them all together and you can see it’s not just about security or reducing operational costs – it’s fundamental to unlocking your potential for sustained innovation and sustainable growth. Streamlining your tech infrastructure allows you to overcome these challenges and position yourself for future success and customer loyalty.

Case Study:
Reducing Tech Bloat

Consider the case of Provenir customer NewDay. Some of their existing systems were proving costly in terms of release times and updates, and were due for decommissioning. By implementing more holistic risk decisioning software, they were able to significantly reduce processing time and improve quote response times.

  • Sub-1

    second decisioning processing time

  • 99.95%

    SLA for availability

  • 80%

    improvement in speed of change

  • 2.5x

    faster quote response

Winning the War on Tech Bloat: Strategies for Financial Institutions
So what can you do to streamline your operations and slim down for good? It sounds daunting, but what it really requires is a strategic, methodical approach (and the right technology partner).
1. Conduct a Technology Audit:
  • Identify Redundant and Outdated Systems: Thoroughly review all of your existing systems to pinpoint which ones are outdated, redundant, or no longer serve a critical function
  • Assess Integration and Interoperability: Evaluate how well your current systems integrate and communicate with each other, identifying gaps and inefficiencies
2. Streamline and Consolidate:
  • Prioritize Critical Systems: Determine which systems are essential for your core operations and focus on maintaining and enhancing those first
  • Phase Out or Replace Redundant Solutions: Gradually eliminate or replace systems that are no longer necessary or that duplicate functionality
3. Invest in Modern, Integrated Solutions:
  • Adopt Cloud-Based Platforms: Leverage cloud technology to improve scalability, flexibility, and cost-efficiency
  • Emphasize Integrations and Scalability: Invest in solutions that can easily integrate with your existing systems and scale as you grow (or can scale as you continue to eliminate other existing systems)
4. Enhance Data Management and Governance:
  • Centralize Data Repositories: Consolidate your data into centralized repositories to ensure consistency, accessibility, and security
  • Implement Robust Data Governance Frameworks: Establish strong data governance practices to manage your data quality, privacy, and compliance
5. Foster a Culture of Continuous Improvement:
  • Encourage Innovation and Flexibility: Promote a mindset that embraces new technologies and innovative solutions
  • Regularly Review and Update Technology Strategy: Continuously assess and update your technology strategy to align with evolving business needs and tech advancements in the industry
6. Partner with the Right Tech Providers:
  • Collaborate with Established Decisioning Software Companies and Consultants: Engage with tech firms and consultants to leverage their expertise and innovative solutions (and be sure they have experience with legacy migrations, complex integrations, and reducing tech bloat)
  • Leverage Industry Expertise to Guide Transformation: Utilize the knowledge and experience of industry experts to navigate the complexities of technology transformation (i.e. does your new tech provider have an experienced Professional Services team that can help guide you?)
Fighting off Future Bloat
Now that you’ve slimmed your stack, how can you ensure that your tech bloat doesn’t return with a vengeance? Adopt a forward-thinking, agile approach. Agile methodologies are crucial, as they promote flexibility in technology development and deployment, allowing you to adapt quickly to changing consumer/industry needs and emerging industry trends. Agile methods encourage iterative improvements, which can help ensure that all of your systems remain both current and effective. Which is also why it’s critical to stay aware (and ahead) of tech advances in the industry. Keeping up with cutting-edge solutions and tech advancements allows you to proactively enhance efficiency and the customer experience. Look towards building a sustainable technology roadmap; with long-term planning that focuses on scalability and adaptability, you’ll ensure that your tech infrastructure can grow and evolve with the organization. Prioritizing this flexibility and continuous improvement and innovation will help you safeguard against tech bloat and maintain a streamlined, efficient, customer-centric tech environment.
Provenir’s AI-Powered Decisioning Platform

Part of fighting the bloat battle is selecting the right technology partner – one that can enable flexibility, scalability, and an end-to-end decisioning platform that you can build and grow your business on. Provenir’s AI-Powered Decisioning Platform brings together the key capabilities you need to turn decisioning into a differentiator, allowing you to deploy accurate, fully automated risk decisioning across the lifecycle, while also gaining actionable insights to optimize strategies and enhance performance across the entire organization. Featuring solutions for data, decisioning, case management, and decision intelligence, across onboarding, fraud & identity management, customer management and collections, Provenir’s platform is a one-stop solution that eliminates silos, brings teams together, and enables sustainable, customer-centric growth.

Want more info on how Provenir’s dedicated team of Principal Consultants and Professional Services experts can help you reduce tech bloat in your organization?

Contact Us

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Finance Forward: 10 Breakthrough Innovations Reshaping The Future of Financial Services

Written by on . Posted in Blog.

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Finance Forward: 10 Breakthrough Innovations Reshaping The Future of Financial Services

Explore how cutting-edge tech will redefine the industry
The past twenty years have seen incredible advancements in technology of all sorts (do we even remember life before the smartphone?) – and the world of financial services is no exception. But innovation is far from over. The financial sector stands on the edge of even more cutting-edge technology, with increasingly sophisticated tech emerging that will enhance decisioning accuracy, improve operational efficiency, and ensure maximum customer satisfaction and engagement. What’s ahead for financial services providers? While it’s impossible to predict exactly what the next twenty years will look like, we’re looking forward to what may be in store in the near future, based on the tech innovations and market-shaping forces in play today.

1. Evolution in Ways to Pay, Borrow, Lend and More

There’s a variety of tech advancements on the horizon that could reshape how we pay for things, how we borrow money, and the landscape of financial services and products in general.
Some of these include:

  • Biometric Payments

    Payments authenticated through biometric data including fingerprints, facial recognition, or retinal scans, enabling a seamless (and secure!) way to pay

  • Voice-activated Payments

    Payments initiated through voice commands via smart speakers or other voice-enabled devices, greatly enhancing convenience for users

  • Invisible Payments

    This includes transactions that occur automatically in the background (one level up from our automated payments for subscriptions for example), with IoT-enabled purchases that reduce friction

  • Peer-to-Peer (P2P) Lending

    These lending platforms will continue to evolve, using blockchain for transparency and security

  • On-Demand Loans

    Instant, micro-loans available on-demand via mobile apps, tailored to individual needs with flexible repayment terms

  • Tokenized Assets

    Tokenization of real-life assets (i.e. real estate, art) enabling fractional ownership and lending, and providing investors with new opportunities

The connected vehicle payments market could reach $600 billion by 2030.

2. The AI and Machine Learning Revolution

Already integral to processing large datasets, ongoing advancements in artificial intelligence (AI) and machine learning (ML) are set to continue to redefine risk decisioning and the entire user experience. Future algorithms will leverage advanced neural networks and deep learning to enable near-real-time decision-making by not only analyzing complex variables (including behavioral patterns and unstructured data), but also predicting results with uncanny accuracy. These advancements in intelligence will also further enhance personalization possibilities, facilitating the shift from static to dynamic risk assessment and accommodating for life changes and real-time behavior – greatly increasing the inclusivity and fairness of financial services offerings (and the customer experience!) along the way. Advanced analytics will also help financial services providers understand on a more granular level how people are using products, enabling you to make improvements, track the customer journey, and interaction points. Likewise, AI enables us to break down silos across different datasets, understand consumer behavior much more dynamically across different systems – and allow you to tailor new products and services accordingly. The applications when it comes to financial services are endless, including AI-driven financial advisors that can provide highly personalized financial planning and wealth management services, tailored to individual goals and behaviors.

As we’re already witnessing, Generative AI will continue to have a massive impact. It is certainly making life easier in many ways (chat bots, personalized email and marketing campaigns, dynamic customer management, etc.), but it will also mean greater ease in testing products and models as new data sets are generated (which used to take an incredible amount of time when done manually). Generative AI could also help test different use cases for products and UAT testing (which is traditionally very difficult and time consuming). We can also use Generative AI to translate videos and documents in real-time, or even do live translations in meetings, increasing the serviceable markets of financial services providers who may have previously been limited by language or region.

AI in Banking market was worth $6794.27 million USD in 2023, and is expected to reach $36765.29 million USD by 2023 (CAGR of 32.5%)

3. Quantum Computing: The New Frontier

Quantum computing promises to fundamentally change the capacity to process information by performing calculations at speeds unattainable by traditional computers, enabling the ability to execute complex risk simulations and fraud decisioning and detection algorithms. This speed enables quicker, and more informed risk decisoning for financial services providers. Quantum algorithms could simulate market reactions to economic events or stress test financial portfolios under a variety of conditions, providing insights at a speed and scale that just isn’t possible with today’s computation methods.

Globally, the financial services industry’s spending on quantum computing capabilities is expected to grow 233x from just US$80 million in 2022 to US$19 billion in 2032, growing at a 10-year CAGR of 72%

4. Blockchain and Decentralized Finance (DeFI)

Offering a decentralized and secure platform that can transform traditional banking infrastructure, credit approvals, and monitoring systems, blockchain technology can make big waves in risk decisioning, with advancements in peer-to-peer lending, smart contracts, and fraud screening measures. With transparent and fixed record-keeping, the technology can streamline processes and reduce operational costs, automating credit decisioning and other transactional processes. And with blockhain’s inherent transparency, the reliability of financial data is improved, greatly enhancing fraud and identity management. When it comes to the increasingly important aspect of identity verification, blockchain can also be useful – enabling Self-Soverign Identity (SSI) and Decentralized Identifiers (DIDs). SSIs allow individuals to own and control their own digital identities, stored on a blockchain for maximum privacy and security, while DIDs use unique, blockchain-based identifiers that can be verified across different platforms without exposing personal data.

5. Rise of Central and Digital Bank Currencies

The potential adoption of digital currencies, including those issued by central banks (CBDCs) could dramatically alter the financial services landscape. Impacting how credit is managed and issued, these digital currencies offer new mechanisms for transparency and efficiency in financial transactions, with faster transaction times, reduced costs, and improved access to financial services, especially in underbanked/underserved communities. When it comes to risk decisioning, digital currencies can provide more streamlined and integrated data flows, enabling better tracking of financial behavior and transaction histories, ensuring more accurate risk assessments.

134 countries and currency unions, representing 98% of global GDP, are exploring a CBDC

6. Integrating IoT into Banking

The integration of the Internet of Things (IoT) in banking could provide continuous data streams to credit risk models, offering real-time insights into a potential borrower’s financial activities and habits, and ensuring more dynamic (and accurate) credit risk decisioning and lower default rates. For instance, data from smart home devices could inform lenders about a customer’s energy consumption patterns, which might correlate with financial stability or risk levels. This level of integration can lead to even more personalized risk assessments, potentially improving credit access and inclusion while mitigating risks for lenders.

IoT In Banking And Financial Services Market size is projected to reach USD $30925 Million by 2030, growing at a CAGR of 50.10% from 2023 to 2030.

7. Cybersecurity: Staying Ahead of Threats

With increased reliance on digital technologies comes increased cybersecurity risks. Robust security measures are critical, and future developments will include predictive and proactive security strategies to safeguard against continuously evolving cyber threats. The financial services industry’s vulnerability continues to grow, requiring innovative tech for protection like AI-driven threat detection systems that can predict and neutralize threats before they do damage. Proactive cybersecurity will become a critical component of risk management, ensuring that both customer data and financial assets are adequately protected. Advanced cryptography can also help with data security, including zero-knowledge proofs (allowing users to prove identity without revealing personal info, greatly enhancing data privacy and security), and homomorphic encryption, which encrypts data in a way that allows computations to be performed without decrypting.

Financial institutions are the second most impacted sector based on the number of reported data breaches; ransomware attacks on financial services increased from 55% in 2022 to 64% in 2023.

8. Sustainable and Social Impact Lending

Environmental and social governance (ESG) is a hot-button topic across industries, and can greatly affect financial services providers. Risk decisioning models will need to reflect the growing consumer and regulatory demand for responsible lending and banking practices, and could even influence the overall strategy of financial institutions towards more sustainable and socially responsible operations. With a rise in conscious consumerism and corporate responsibility driving the integration of ESG into financial decision making, lenders can use ESG scores alongside traditional metrics to assess credit and fraud risk. This approach aligns with global sustainability goals but also greatly appeals to a growing number of consumers (and investors) who place high value on organizations that prioritize ethical considerations in their operations.

Global sustainable finance product issuance totalled $717 billion in the first half of 2023.

9. The Impact of Regulatory and Ethical Developments

As technological capabilities expand, so does the scrutiny around their implications. AI and advanced data analytics in particular will require the need for robust regulatory frameworks to ensure these technologies are used ethically and responsibly – including data privacy, preventing bias in AI algorithms, and maintaining transparency and explainability in AI-driven decisions. Financial services providers will need to navigate a world where regulatory compliance is about much more than just following laws, but also about maintaining ethical standards and ensuring ongoing public trust, especially in decisions that affect individual creditworthiness and privacy.

By the end of 2024, Gartner predicts 75% of the global population will have its personal data protected by modern privacy regulations.

10. Identity Verification

The most critical aspect of offering loans or any other financial service is determining who you are dealing with and what the risk is. The way we identified individuals and their potential risk two decades ago was monumentally different than where we are today, and in the future this process promises to be even more seamless – and all-encompassing. We can expect even more dynamic verification codes to reduce the risk of fraud, highly-accurate DNA-based identification, genetic markers to be added to biometric identification systems, and more inclusive/accessible verification solutions that adhere to yet-to-be-established global standards for digital identity. Also possible are multimodal biometrics, combining multiple identifiers including behavior (typing patterns, mouse movements, gait) to continuously verify identity in real-time. Likewise, we can use wearable devices like smart watches and fitness trackers, as well as smart environment interactions (connected devices including smart homes, cars and workplaces) to verify identity, potentially reducing friction in the process.

Western Europe and Asia Pacific will potentially account for 50% of digital ID verification spend by 2028.

Future Innovation and The Customer Experience

Technology has always had the power to drive significant change in all aspects of society, and future tech advancements will continue to alter how financial institutions operate and interact with their customers. A common theme running through all of these innovations is the ability to personalize products and offerings, highlighting the extreme importance of the customer experience. A prime example of this is dynamic, responsive onboarding – where financial services providers are tailoring the onboarding experience to individual customers by matching data checks (including identity verification, AML, KYC, and more) to the event risk and the responses of the customer. Depending on the consumer’s answers in an application, the actual application itself will change dynamically – populating additional responses required or minimizing friction with fewer questions if lower risk is determined.

Today’s consumers will no longer stand for long wait times, inadequate customer service, and mass-marketed products. Instead, a competitive edge requires rapid response times, omnichannel offerings, customized products, and frictionless experiences – all enabled by automated, real-time decisioning.

But the concept of ‘decisioning’ itself will also evolve. Currently financial services providers utilize specific triggers that result in a decision being made, whether that’s from the end-consumer applying for a product, or from a provider proactively analyzing data and making a decision to offer a new product. But with the increased availability of data, extremely fast processing speeds, and the enhanced use of AI to analyze data and behaviors, decisioning will become much more fluid. Rather than trigger points causing a decision, are we in for a future where decisions around customers and products/services are just continuous? Seamless? Always happening? This too will result in more hyper-personalization and a customer-centric approach in all aspects of financial services.

Done well, personalization at scale for banking customers can lead to annual revenue uplifts of 10%

As these technologies develop, Provenir continues to lead the charge, offering an advanced decision intelligence platform that is adaptable, efficient, and strategically forward-thinking. Discover why choosing Provenir is the best decision for managing risk in a technologically evolving landscape.

Ready to lead in the future of financial services?

Contact us today to explore our cutting-edge risk decisioning solutions.

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