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Cloud Computing: A Brief History and Its Evolution

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Cloud Computing:
A Brief History and Its Evolution

Cloud computing has come a long way since its humble beginnings in mainframe computing several decades ago. It has evolved to become an integral part of modern-day technology, offering businesses and individuals unprecedented flexibility and accessibility to vast computing resources. In this blog, we’ll explore the history and evolution of cloud computing, and how it has paved the way for a new generation of cloud computing that promises even greater value and automation.

Cloud Computing’s Humble Beginnings

The concept of cloud computing is rooted in the mainframe computing era of the 1950s, where computer systems were massive and expensive to operate. It was during this time that virtualization, the precursor to cloud computing, was first introduced. Virtualization allowed multiple users to share a single mainframe computer, reducing costs and increasing efficiency.

Virtualization remained a niche technology until the advent of personal computers in the 1980s. With the rise of the internet in the 1990s, the concept of remotely accessing computing resources over a network began to take shape. However, it wasn’t until the 2000s that cloud computing as we know it today began to emerge.

Amazon Leads the Way

In 2006, Amazon launched Amazon Web Services (AWS), a cloud computing platform that allowed businesses and individuals to access computing resources over the internet. AWS was the first cloud platform to offer on-demand computing resources, allowing businesses to scale up or down as needed, without having to invest in expensive hardware or software. AWS quickly gained popularity, and other cloud providers, such as Microsoft and Google, followed suit. Today, cloud computing has become a ubiquitous technology, with businesses of all sizes using it to power their operations.

We’re already starting to see the emergence of the “super cloud” or “cloud +1,” which sits above the cloud, offering businesses a ready-to-go system. This new cloud architecture will need an easy-to-use visual front-end so that users can assemble cloud “building blocks” for a total solution.

The Financial Industry and Cloud Computing

The financial industry has traditionally been slow to adopt cloud technology. However, this is changing rapidly. In a Cloud Security Alliance survey last year, 61% of respondents admitted that a cloud strategy is only in the formative stages within their organization.

With the capabilities cloud computing offers, banks and other financial institutions can’t afford to ignore the cloud. By using cloud computing, they can do more with less and reduce high in-house IT costs.

Cloud computing has come a long way since its inception in the mainframe computing era. From its humble beginnings, it has evolved to become an integral part of modern-day technology, offering businesses and individuals unparalleled access to vast computing resources. As we look to the future, the next generation of cloud computing promises even greater.

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Celebrating World Health Day 2022 – #HealthierTomorrow

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Celebrating World Health Day 2022
#HealthierTomorrow

10 Fintechs / Finservs Impacting Global Health

April 7 is World Health Day – a day celebrated annually to mark the anniversary of the founding of the World Health Organization (WHO) in 1948. This year, the theme is centered around Our Planet, Our Health, with the goal to focus global attention on the actions needed to keep not just people, but the entire planet healthy. The more work we do as a society to promote the well-being of the earth and its inhabitants, the better off we’ll all be.

Encouraging both individual health and promoting broader societal health initiatives (like accessible healthcare, clean drinking water and proper sanitation) is critical. Proven interventions such as government programs or charitable initiatives that expand individual access to health care and promote healthy behaviors (i.e. moderate exercise, adhering to prescriptions, eating more vegetables) can reduce the global disease burden by 40 percent over 20 years. And the economic impact is staggering. Better health could “add $12 trillion to global GDP in 2040 – an 8 percent boost, or 0.4 percent a year faster growth.”

This is why the United Nations’ Sustainable Development Goals (and the companies that aim to meet them) are so important. Including everything from Good Health and Well-Being, Clean Water and Sanitation, to Affordable and Clean Energy, the goals aim to ensure equal access globally to the basic health fundamentals some of us take for granted. That inequality has been particularly prevalent in the past couple of years, revealing underlying weaknesses in all areas of society and highlighting the urgency of creating sustainable well-being for all individuals. The current global economic design is not sustainable – with an inequitable distribution of income, wealth and power resulting in a majority of the population living in poverty. As the World Health Organization states, “A well-being economy has human well-being, equity and ecological sustainability as its goals. These goals are translated into long-term investments, well-being budgets, social protection and legal and fiscal strategies. Breaking these cycles of destruction for the planet and human health requires legislative action, corporate reform and individuals to be supported and incentivized to make healthy choices.”

We’ve chosen to take this World Health Day to look at some unique fintechs and financial services organizations who have these goals in mind – fostering better health for people and the planet at large.

  • Sempre Health – Working with regional health-care plans, Sempre Health encourages users to be responsible about taking medications as prescribed and re-filling as required. With discount codes reducing the cost of prescription co-pays and easy refill reminders, the incentive is clear – taking your prescribed meds as intended benefits your health and your wallet.
  • PayZen – A mobile app that uses data and AI to create individualized patient payment options, PayZen aims to make healthcare more affordable for American families. The company even offers an innovative spin on the ever-popular Buy Now, Pay Later (BNPL) product, with their own version referred to as Care Now, Pay Later. Health-care providers have access to PayZen’s predictive modeling power, enabling them to offer the right payment options to the right patients at the right time via a fully automated process.
  • Novus – The UK’s first B Corp certified neobank, Novus bills itself as a ‘force for good,’ offering a payment card where you earn impact coins for every payment. Coins can then be used to support over 10 different causes – including ocean conservation, education, hunger alleviation and reforestation. Their app also allows you to track your carbon footprint and discover ethical, sustainable brands in a variety of categories, with additional incentives for purchasing from them.
  • Arogya Finance – With a belief that access to healthcare is a basic human right, India-based Arogya Finance has partnered with local hospitals and health-care providers to enable direct access to medical loans for individuals and their families. The health insurance system in India is complicated, with penetration notoriously low – Arogya Finance’s method of providing funds directly to patients means it can lend even to those outside of formal lending structures.
  • MedPut – A unique employee benefit app, MedPut pays for and negotiates unpaid healthcare bills, with repayments made through small, consistent payroll deductions. The deductions are interest-free, with no credit check required, and having MedPut negotiate on the patient’s behalf saves time, stress and ideally even money, with the organization frequently able to negotiate discounts on larger bills.
  • Lynx – With a goal of introducing modern fintech to healthcare, Lynx is an API-connected healthcare payments, banking and e-commerce platform.  With the majority of Americans experiencing climbing deductibles and increasing healthcare costs, Lynx has combined fintech with deep healthcare expertise, enabling healthcare companies to improve affordability, drive health engagement and enhance financial security.
  • M-KOPA Solar – This African company’s innovative pay-as-you-go financing model allows customers to get instant access to life-changing products, while slowly building ownership with a series of flexible micro-payments. One such plan involves solar power – allowing families to reliably power basic necessities like electric lights, refrigerators and charging ports.
  • Babylon Health – Combining AI and innovative technology with human expertise, Babylon Health offers affordable and accessible healthcare to a global audience. With 24/7 access to doctors, nurses, personalized care plans, referrals to specialists and personalized digital health tools through mobile devices, the Babylon app facilitates partnerships with healthcare providers to ensure greater accessibility and ease of payments.
  • ShareTheMeal – An award-winning crowdfunding smartphone app designed to fight global hunger through the UN World Food Programme, ShareTheMeal enables users to make small donations to specific WFP projects and even tracks the progress of the programs. As of this January, the app has 6 million downloads and has contributed to over 130 million meals shared to those in need.
  • Klima – A Germany-based smartphone app that encourages carbon neutrality, Klima helps users offset their carbon footprint in four simple steps: by calculating your carbon footprint; offsetting your footprint by investing in climate projects; seeing your climate achievements in action; and offering personalized tips and checklists to further shrink your climate impact. Users can choose to invest in projects related to reforestation, solar power and providing clean cookstoves to those in need.

It’s clear there is more work to be done, and quickly, in order to achieve the Sustainable Development Goals and realize the WHOs dream of a healthier planet. We’re excited to see all of the innovative fintechs and other organizations emerging with new and unique ways to get us to a #HealthierTomorrow.

Interested in innovation to further the goal of a healthier planet?

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Machine Learning in Banks: The Solution to the Data Scientist Talent Gap

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Machine Learning in Banks:
The Solution to the Data Scientist Talent Gap

In 2023, the shortage of skilled data scientists is still a challenge for financial institutions. According to Indeed.com, the popular recruiting site, searching for “Data Scientist Financial Services” returns 1745 results. McKinsey & Company studied over a dozen banks in Europe that have replaced older statistical-modeling approaches with machine-learning techniques and saw significant improvements in their business metrics.

The Talent Gap Challenge:

With the increasing importance of data analytics in banking, the shortage of skilled data scientists is becoming increasingly serious. Tools for collecting, sifting, and sorting data become faster, cheaper, and better, but people with the skills to make use of the results are harder and harder to find.

Cloud-Based Machine Learning Services:

Cloud-based machine learning services can help fill the talent gap by opening up opportunities for junior or internal hires to augment risk analytics teams, provide immediate value, and grow into more advanced roles. Machine Learning can train and deploy a credit risk model in about 20 minutes, even by someone with little to no experience.

Benefits of Machine Learning:

Machine learning is not just a temporary solution to a talent problem. McKinsey & Company’s study of European banks revealed increases in sales of new products, savings in capital expenditures, increases in cash collections, and declines in churn after replacing older statistical-modeling approaches with machine-learning techniques.

Automated Risk Decisioning:

Combining machine learning with automated risk decisioning can prove invaluable to a financial institution’s bottom line. Automated risk decisioning helps make better credit decisions and improves overall portfolio performance.

Machine learning is the solution to the data scientist talent gap in the banking industry. Cloud-based machine learning services can provide immediate value and help junior or internal hires grow into more advanced roles. The benefits of machine learning are significant and can positively impact a financial institution’s bottom line.

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Guest blog: How mobile data secure solutions can help prevent fraud throughout the customer journey

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How mobile data secure solutions
can help prevent fraud throughout the customer journey

  • Sarah Small, Global Partner Marketing Manager, Sekura Mobile Intelligence

It’s clear that the events of the last two years have forced the business world to undertake a digital reality check and left organisations racing to address the challenges created by the rapid and unexpected adoption of online services. This double-edged sword of rapid consumer behaviour change has created the ideal environment for organisations to rethink their business model towards a digital-first strategy, whilst unfortunately also exposing them to digital fraud and online scams in unprecedented volumes.

Changes to consumer behaviour – a playground for fraud

Much has been written since the pandemic hit about the impact of Covid 19 and the changes that society has had to make in both personal and working lives. High streets are struggling, major retailers have closed or moved exclusively online, and for a period of time our working and in part social lives became an online activity only.

But as ever, where the genuine consumers are, the fraudster will follow. With the dramatic shift to online digital transaction has come the inevitable increase in online fraud – social engineering-enabled scams, account takeovers and theft.

In the first half of last year, criminals stole a total of £753.9 million through fraud, an increase of 30% compared to the first half of 2020. UK Finance

And so, controls are needed. To create the appropriate level of protection in online channels, these controls must be applied across the customer lifecycle, from the initial account set up and throughout a user’s transactional journey, including verification of a customer’s identity at account application and onboarding, confirmation of ID at account login and by verifying device ownership and authenticating the user during transactions, payments, money transfer and through all sensitive online activities.

The ultimate goal is to achieve a secure and frictionless online experience for the genuine customer while making it as difficult as possible for bad actors to succeed. Mobile operator data can offer the solution.

The power of mobile data

While the world has been going through rapid digital change, global mobile operators have been working to get mobile identity services prepared and optimised in readiness to support the explosion of new services and the use cases that this has created.

Worldwide, mobile operators are recognising and commercially deploying their digital identity services and resources to provide a unique set of tools and to enable secure customer authentication, user identity verification and account protection solutions. Their entry into this market has been carefully considered (for example to align with data privacy regulations) and now more operators are offering authentication services and other mobile identity tools and are gaining traction in the market.

Monthly active users of operators MSISDN-based authentication services alone are approaching 1 billion and are estimated to be growing at over 17% a year. Furthermore, several dozen innovative mobile operators are developing their mobile identity services, building on new investment and capabilities in big data, AI, machine learning and APIs to bring more advanced mobile identity products to market.

How Sekura is utilizing this data

The Sekura prediction: 2022 will be seen as the year that mobile identity intelligence data became a truly fundamental enabler for the ongoing growth of the global economy.

Now is the time that the global identity challenges and the increased availability of mobile solutions align to create a market in which mobile data can address real world problems using frictionless, seamless, real time mobile services to simplify customer journeys and prevent bad actors.

The mobile phone provides unique data in that it is the only available source of ‘dynamic’ data about what is happening right now – in ‘real time’. This capability allows mobile data to be used as a source of valuable signals in the fight against fraud, even in the fast-moving digital world that we live in.

Sekura have harnessed this ‘dynamic data’ to flag whether a device has been lost or stolen, signal that a SIM card has been recently swapped, that Call Forwarding has been set to divert calls to another device, or that a device has been recycled and is no longer used by the previous owner. The signals that it can reveal are available immediately so that if any of these actions occur, the data can be checked within an online banking or retail flow and used to help prevent fraudulent transactions or transfers before they happen.

Even better, by using mobile data to keep fraudsters out, it is also possible to easily identify the good guys – you and me – and ensure that, with simple mobile data checks behind the scenes, we are able to access our online services securely, quickly and easily and get on with our lives.

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Guest Blog: How can Technology Accelerate the Growth of the Mexican Market in 2022?

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How can Technology Accelerate the Growth of the Mexican Market in 2022?

  • Erez Saf, CEO and Founder, CRiskCO

In every aspect, 2021 has been a year of growth for the Mexican economy. With a year preceding, such as 2020, when the COVID-19 epidemic began and halted growth, a negative economic prediction for 2021 was made if the previous year’s trend continued, but statistics proved the opposite.

Because of the pandemic’s effects, Mexico’s economy contracted by 8.3 percent in 2020, but it grew by 6.25 percent in 2021. The following table shows the trend of Mexico’s GDP over the past 10 years.

FinTech investments in the Mexican market boomed in 2021. In the past year, unicorns, (recently established companies worth more than $1 billion), entered the scene in the country. Since last year, the number of fintech companies in Mexico has increased by 16 percent, accounting for nearly half of all financial technology startups in the Pacific Alliance.

Despite its status as an emerging industry, the Mexican market is currently beset by plenty of challenges. It’s vital to note that present circumstances, such as the COVID-19 pandemic, have had an impact on the country’s small and medium businesses’ growth, maintenance, and opportunities.

If properly implemented, technology may be a great ally in overcoming these difficulties and enhancing market conditions that favor SMB growth and boosting the economy. 

Challenges

Access to credit

One of the most critical challenges that SMBs face is access to credit, and the use of credit in order to grow and build existing and new businesses. Given that 44% of SMEs seek funding to meet operating expenses and 56% need funds to expand their business or pursue other opportunities, waiting weeks or months for approval can have serious consequences, particularly in our current economic environment. 

Currently, applying for a business loan is done manually, with a lot of different financial reports, phone calls, and visits to the branch, which is a time-consuming and costly process. As a result, many business owners are unable to get a loan, or often feel it isn’t worth the time to apply, making it very difficult for them to grow or even survive. Due to the time and effort required to complete this manual activity, many clients are turned down without further evaluation. 

Reaching New Consumers in the Mexican market

Reaching new customers in a booming market like Mexico is a major challenge. As the economy grows, businesses want to reach out to more customers, and break out from the physical limitations of proximity to clients. but doing so in a secure and safe manner is difficult and requires planning. To meet this challenge, businesses must have a complete strategy in place and work with the proper partners. 

So, how can Mexican small and medium businesses take advantage of the circumstances to grow their businesses and overcome these challenges?

Technology can be the answer and open new opportunities

Undoubtedly, technology can assist firms in operating more efficiently. Recent technological developments have the potential to significantly improve how business owners operate and provide SMBs with growthand  maintenance opportunities.

If properly implemented, technology may be a great ally in overcoming these difficulties and enhancing market conditions that favor SMB growth and boosting the economy. 

Small and medium businesses require financing to expand and maintain their operations. To efficiently accomplish this, lenders and applicants must have better tools for promptly and securely approving loans. With digital credit risk decisioning solutions, SMEs can apply for loans online. Using traditional and alternative sources of data, lenders can expedite decisions without increasing their risk, and approve loans quickly. Lenders benefit from platforms and solutions that enable them to collect data about potential borrowers from a variety of sources in order to make more accurate risk judgments faster. A big advantage for Mexican businesses and lenders is the SAT and the availability of SAT API data that can create a reliable financial profile of a company digitally and in a short time.  

By using the available technology, lenders save time and money, analyzing more businesses for loans and expanding their portfolio. The transition from a physical to a digital process benefits the business owners since it eliminates erroneous discrimination and allows for a more objective examination. With the use of technology in underwriting, more business owners will get approved, and see the money in the bank quickly so they can survive and grow. 

Technology also can help us expand our client reach and allow more clients to buy more. First, implementing more ways for your clients to pay can grow the business. Implementing Point of Sale (POS) software/hardware can allow credit and debit card transactions. There are many new and experienced POS providers in Mexico and implementing it today can be as easy as downloading an app. POS transactions can take place in person or online, thus preparing the business for another expansion into E-commerce.

Implementing E-commerce can help the business reach a larger audience. Due to COVID-19, the use and purchase online with e-commerce platforms has been in steady increase, creating new opportunities and customers looking for solutions. Using E-commerce, business owners will not encounter market limitations, clients will have more flexibility, the purchase process will be faster and easier, and expenses will be reduced.

Conclusions

Despite the fact that the Mexican market is growing, small and medium-sized enterprises encounter many difficulties. The lack of access to financing and keeping up with the country’s economic growth are all significant issues businesses need to address. 

It may sound cliche to argue that we should embrace our obstacles and convert them into opportunities, but that is exactly what we should do in this case. And, in the twenty-first century, having technology as an ally is essential to accelerating the growth of Mexican businesses in 2022. 

CRiskCo brings together small and medium businesses and professional credit providers with Credit Risk Analysis, Management and Matching platforms for both lenders and borrowers. Lenders can use CRiskCo’s APIs to connect to SAT data and extract from SAT API a detailed risk analysis using AI and Machine Learning. Learn more about how Provenir and CRiskCo can enable lenders easily on the Provenir Marketplace. 

Sources

https://www.bizlatinhub.com/mexico-fintech-industry-grows-16-during-pandemic/ https://www.investopedia.com/ask/answers/090915/mexico-emerging-market-economy.asp
https://www.bloomberglinea.com/2021/12/23/2021-mexicos-year-of-unicorns-and-a-startup-investment-boom/

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The Promise of AI: Level Up Decisioning Across The Entire Customer Lifecycle

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The Promise of AI:
Level Up Decisioning Across The Entire Customer Lifecycle

  • Brendan Deakin, SVP Sales, North America

If there are kids in your life (or even some adults – we don’t judge), you may have heard of Minecraft. You start with nothing – gathering some basic raw materials and finding food and shelter – but in order to really get ahead in your worlds you need to level up your game. You have to figure out which elements to put together to create the things you need to not only survive but thrive.

Today’s risk decisioning is also about evolving beyond the basics. When you start out making credit risk decisions you may just have the essentials – some data, some workflow tools, some basic automation. But to really level-up your decisioning you need more. More data, more automation, more sophisticated processes, more forward-looking predictions. And to do that, you need AI.

We’ve all seen the end-of-year roundups, predictions for 2022 and ongoing fintech trend reports. (Sidenote: we’ve even conducted our own proprietary survey of 400 leaders in financial services and banking – want to see what’s in and what’s out? Check out our recent discussion with Forrester). And they all agree – artificial intelligence and machine learning are here to stay. 64% of those we surveyed said AI is currently an important feature of their risk decisioning or consider it one of the most important features when selecting a system, and 86% of financial services executives plan to increase their investment in AI.

Much of the discussion around AI centers around cost and time – as in, it takes a long time to develop and implement AI, and it can be prohibitively expensive. And if you do manage to implement a successful AI project, it can take months (or longer) to see any tangible ROI results. “56% of global CEOs expect it to take 3-5 years to see any real ROI on their AI investment.” Who has time for that??

But there’s more to it. AI-powered risk decisioning is about more than just more accurate decisions and better predictability. What’s talked about less is how it impacts the entire credit risk lifecycle.

Currently, only a small amount of AI projects are perceived as a success. Those that are successful create tangible benefits across the credit risk lifecycle that drive growth, increase agility, and make your business more competitive. For example, Provenir customer Pinjam Modal, saw a huge performance lift in their decisioning accuracy, with bad rate reduced by 60%. AI, implemented and used correctly, has the ability to power performance improvements in multiple ways.

Expand Your Customer Base

AI empowers you to confidently say yes to customers you haven’t been able to approve before, driving business growth without sacrificing performance. How? AI flips your traditional risk analytics on its head. Rather than starting with a set of clear rules and decisioning based on those rules, AI models don’t need rules. Instead, they can identify patterns within data and then decision using those patterns. So, instead of needing to know the story data tells before you start decisioning, AI identifies those stories for you!

What does this mean for your customer base and in turn your business? With AI you are no longer confined to pursuing customers with the attributes of your existing lending base. Instead, you can use AI models to discover new patterns in the data that empower you to lend to a much wider base of people. It’s a quick way to drive business growth without increasing costs or risks – like getting special powers in a video game that immediately boost you over the finish line.

Support Financial Inclusion

We can’t talk about the benefits of AI without mentioning financial inclusion. In the US alone, 24% of the population are underbanked with a further 10% completely unbanked. Approximately 3.6 billion people in Asia have no access to formal credit and there are about 200 million unbanked individuals in Latin America. Globally, up to one-third of all adults (1.7 billion at last count, according to the Global Findex database) lack any type of bank account, meaning that access to financial services is difficult for a significant number of consumers. Financial services organizations typically struggle to support these consumers because they don’t come with a history of data that is understandable by traditional decisioning methods. However, because AI can identify patterns in a wide variety of alternative, traditional, linear, and non-linear data, it can power highly accurate decisioning, even for no-file or thin-file consumers. It’s like finding a secret shortcut – the data was there, you just needed the right tools to uncover it. In a recent report, PWC reported that banks launching AI initiatives were able to increase their lending approvals by 15-30% with no change in loss rates. These figures include loans to previously overlooked borrowers. AI gives your organization the opportunity to support unbanked and underbanked consumers on their financial journeys. 

Identify Fraud + Say Yes More

Did you know that identity fraud losses hit $56 billion in 2020? In today’s digital world, where all types of fraud attacks, not just identity fraud, are getting more sophisticated and widespread, how do you really know who’s legitimate and who’s not?

If you’re struggling to manage high fraud rates and false positives using rule-based detection, AI could have an immediate and significant impact on your fraud management performance. A key benefit of using AI for fraud detection is its ability to get smarter with each transaction it processes. So, even when fraudsters evolve their methods, your AI models can use real-time data to identify new patterns, learn, and adapt decisioning to maximize the right fraud alerts and minimize false positives. Financial institutions who had already adopted AI were surveyed in a recent PMYNTS study on the benefits of AI – 81% cited being alerted to fraud before it happens, 75% said the reduction of false positives and 56% said the reduction of payment fraud were key outcomes of their AI systems. 

Be More Competitive With Optimized Pricing

Increasing competition means that you need to make the right offer at the right price. Using AI for pricing optimization not only makes your products more attractive, it lets you maximize profitability. How does it do this? AI empowers you to be more confident about the risk a credit application poses, so you can more accurately assess how to price the credit you offer. Instead of lumping applications into price buckets you can get closer than ever to personalized pricing. Innovative lenders are also using AI to measure an applicant’s propensity to buy and combining this information with credit worthiness to determine the most attractive rate.

And more accurate decisioning means lower loss reserves, enabling you to have more capital available for lending activities. AI empowers you to make your lending portfolio work harder.

Expand Your Relationship With Personalized Upsell and Cross-sell Offers

What was the most frustrating part of playing video games in the 90s? Finding out the Princess was in another castle. Why? Because you’d done all of the work without the satisfying ending. Your customers have already gone through the work of onboarding with you for a specific product, but what happens when you don’t offer them other products they need at exactly the right time? They find it in another castle. These days, loyalty to particular financial institutions is waning, quickly – 31% of consumers surveyed will switch primary providers over everything from fee levels and rewards to security issues and convenience. According to the Financial Brand, “while 66% of customers expect companies to understand their unique needs and expectations, only 32% of executives say they have the full ability to turn data into personalized prices, offers and products in real time across channels and touch points.”

What advantage do you have over your competitors when it comes to existing customers? Data. Lots of it. But finding the patterns in that data to show how, when and what offers to give your customers has traditionally been expensive, time consuming and difficult. Enter AI.

With the right AI models and automated decisioning you can analyze your customer data and automatically make the upsell and cross-sell offers when they are most likely to convert. Big brands we all know and love do this extremely well – according to McKinsey, “35% of what consumers purchase on Amazon and 75% of what they watch on Netflix come from product recommendations” based on AI algorithms. Become the only castle your customers need for all of their financial services needs by showing that you truly understand and anticipate their needs.

Predict and Prevent Losses Through Better Customer Management

Is your technology and analytics reacting to delinquent accounts, instead of predicting which customers will face financial challenges? Does it use a set of defined rules to predict delinquencies? Are predictions based on historical data? If so, you could be missing out on the opportunity to both better support your customers and reduce losses.

More traditional analytics approaches to predicting which accounts will go into collections rely heavily on historical data and predefined rules. But, in today’s digital, fast-moving world, the data you need to make accurate collections predictions is often produced in real-time. Put simply, traditional risk decisioning looks for delinquency patterns that we already know. AI on the other hand, ingests real-time data and uses that data to identify new patterns, enabling you to make more accurate delinquency predictions. This, in turn, empowers you to work with customers to help them manage their finances. It’s a win-win situation: you get to reduce the number of customers being pushed to collections and you get to build stronger relationships with your customers. Kind of like the advent of online gaming – working with a partner in real-time produces better results, and a higher win rate. As Forbes puts it, “Machine learning can also be used to determine the probability of delinquency for specific borrowers. This early warning system allows lenders to focus their energies on at-risk clients to prevent their accounts from becoming delinquent in the first place.” 

Organize Your Resources

In any endeavor, it’s critical to be organized. Implementing an AI project is no different. It may seem daunting, but it’s clearly worth it. Particularly if you work with a technology partner to implement AI quickly and efficiently – and see the returns faster than you thought possible. Talk about a winning strategy.

Want to learn more about how to level up your decisioning across the entire credit risk lifecycle in less than 60 days?

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Ten Fintechs Driving Auto Financing Innovation

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Ten Fintechs Driving Auto Financing Innovation

How to Improve the Auto Lending Experience with Technology

The very first car loan was originated by General Motors Corporation in 1919, and in the century since, leasing and financing has become a critical part of the automotive industry globally. But has the customer experience changed much since then? Picture your last automotive purchase – did it involve lots of paperwork, sitting around at a dealership, and painful photocopies of every single piece of your ID?

Ninety minutes is all it takes for customer satisfaction to decline at a car dealership, and according to AutoTrader, 65% of car shoppers think that financing and paperwork take too long. But don’t fret – as the world continues its rapid advance towards digitizing everything, auto lenders are following suit. In fact, 72% of consumers want to complete credit applications and their financing paperwork online. So we’ve found ten innovative fintechs/financial services organizations that have figured out how to help them do so or have innovated other aspects of the auto financing process.

  1. Upstart – Auto Retail: Combining online and in-store digital retail capabilities, Upstart Auto Retail aims to help car sellers/dealers create a truly omni-channel purchasing experience. Upstart is an AI lending marketplace that looks to improve access to credit, and has automated the auto lending experience, enabling more loan approvals in real-time, based on individual pricing and financing rules established by the dealer.
  2. Caribou: With a mission to put drivers in control of their automotive finances, U.S.-based Caribou enables ‘flexibility and freedom’ in car payments, thanks to their fast and easy auto refinancing program. Offering instant access to competitive financing rates and a secure online application platform, Caribou saves its customers an average of $100 per month on their car payments.
  3. TU Auto Payment Shopper: Combining affordability with real-time inventory, TransUnion’s Auto Payment Shopper is an upgraded retail portal that allows consumers to complete more of the auto financing process online. Enabling consumers to compare vehicles (and vehicle payments) before submitting an application, the program, in partnership with CarNow, ensures people understand which vehicles they can afford before having to go through the entire process.
  4. Cazoo: UK-based Cazoo allows consumers to buy or finance vehicles entirely online, with delivery or pickup of new cars in as little as 72 hours. Promising ‘simple’ financing of used cars, Cazoo offers competitive interest rates, fast decisions, and applications and agreements for financing all done online, thanks to its data-driven strategy.
  5. AutoFi: With online commerce and showroom options, as well as a whole suite of APIs, AutoFi enables auto lenders to incorporate digital sales and finance tools right into their existing platform or build their own from the ground up. And AutoFi ensures automated financing processes with direct partnerships with over 40 lenders, smart lender routing, and real-time decisioning direct to consumers.
  6. Carvana: Carvana, one of the leading online car-buying sites in the U.S., also makes it easier for consumers to finance used vehicles. Consumers can browse the site to find their next vehicle, apply for financing directly with Carvana, and have their new vehicle delivered right to their driveway. With their pre-qualifying auto loan program, the company allows buyers to browse inventory with personalized financing terms, without impacting credit scores with hard credit checks until they are ready to buy.
  7. Automatic: Billed as a one-stop-shop for auto financing, Automatic is a platform that allows both small and large independent dealerships to take control of their financing products. Featuring an open marketplace that enables dealers to connect to a variety of financing options instantly after pushing through a credit application from a consumer, Automatic offers real-time results and speedy approvals, all in a single online platform.
  8. AusLoans: Based in Australia, AusLoans Finance Group positions itself as one of the nation’s leading Asset Finance aggregators, thanks to its dedicated investment in technology and transparency, and also offers customer financing options for automotive businesses. Featuring a point-of-sale automotive financing solution, partnerships with over 40 local lenders, fast approvals, and paperless application processes, AusLoans can offer loans of up to $500K to dealerships to pay for automotive services.
  9. Ally: Ally, a leader in digital financial services, also offers personal vehicle financing with flexible terms and easy payment options. With online account management and a mobile app for customers to keep on top of their account on the go, Ally aims to provide auto financing that fits every type of consumer. They even offer specialty vehicle financing, with flexible terms that cover accessibility needs like hand controls and wheelchair lifts.
  10. CarDoor: Partnering with multiple lenders, Canada’s CarDoor ensures consumers get the best possible financing rates and receive approvals in only minutes. With a completely digital car buying process, CarDoor offers an online application process and financing that is promised to be secure, transparent, and flexible – all at the best possible rates. And as a bonus, customers can pre-quality with only a soft credit check, and approved loans also get a free TransUnion Risk Score Report.

These organizations all understand that a memorable, satisfying consumer experience is one that is fast, digital, and easy. The future of auto financing is here, but how can all lenders join the club? One way to ensure automated decisioning, rapid approvals and personalized experiences is with real-time data and AI-powered decisioning solutions. Being able to easily access, integrate and analyze alternative data especially is key, thanks to today’s increasingly diverse populations. Many people globally don’t have traditional credit histories or can’t easily prove creditworthiness with a traditional credit report or score. But being able to integrate things like rental and utility payment data, social media and web presence info, and travel information can help. Despite the current economically uncertain climate, Mordor Intelligence predicts that the global automotive financing market is expected to reach $300 billion by 2026, so there’s never been a better time to drive more innovation in auto lending.

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Shaking Off the Tech Debt

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Shaking Off the Tech Debt

What is Tech Debt?

Tech debt is the idea that when a business uses the easiest tech solution instead of the best tech solution, they’re creating a technology debt that’ll need to be repaid in the future. This means that companies who have accumulated tech debt are often weighed down by technology that slows down their agility and impacts their growth potential.

Tech Debt in the Financial Services Industry

Let’s look at the story of a financial services company that started out three years ago. Like many startups, it needed to launch quickly, so it used a combination of simple technology developed in-house and some manual steps to get the job done. Once the product was live, the business experienced a period of rapid growth which placed a heavy burden on the technology underpinning the product. The company quickly realized that it couldn’t grow any more with its existing set-up.

This isn’t the only company that finds itself in this situation; in fact, tech debt is increasingly common in growing fintechs as well as in the large banks who are famously beset by the challenges of legacy IT. Startups aren’t expected to have this problem because they’re new and began in the technology era; they’re seen as nimble and able to deliver value quickly. However, in reality, business decisions, and IT decisions that go with them, set companies on a course, and if that course needs to change, the business can only pivot as quickly as their technology can be turned.

The Growing Interest on Your Technology Troubles: Paying the Bank of Tech Debt

Just like any other type of debt, there’s always a cost to borrow. While the cost to future technology development is obvious, it’s the growing interest on your business that is often the bigger problem. Financial services businesses operating any kind of digital service rely on technology for agility, flexibility, and scalability. When your technology is broken or in debt, all parts of your business suffer.

Breaking Down Walls – How to Tackle Tech Debt

To address the limitations of traditional conference venues, new venues are built with partition walls that can be added or taken away depending on the type of event and number of people. This makes them more flexible, scalable, and profitable.

It’s not so very different to the tech debt issue. In the past, companies, including those in credit and lending, payments and eCommerce, opted for hard-coded systems to perform certain functions. These systems will scale up to a point, and beyond that, everything has to be done manually. Making changes to the systems takes weeks or months.

Companies setting up now can’t opt for this approach anymore and those already struggling with a tech debt can’t afford to not plug their IT gap or they will struggle to compete. Instead, these companies need to invest now (rather than invest more later) in ‘partition-wall-like’ technology that will grow with them and adapt.

In a digital world where the cost of tech debt is more than just a tech problem, businesses need to look for their ‘partition’ technology. Only with scalable and flexible solutions will financial services businesses tackle tech debt and be prepared for the future.

Many companies, including those in financial services, are grappling with tech debt. To stay competitive, companies need to invest in scalable and flexible technology solutions that can adapt as their business needs change. By doing so, they will be better prepared to tackle the challenges of the future.

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Dear Mr. Lender: A Letter From An Anonymous Customer

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Dear Mr. Lender:
A Letter From An Anonymous Customer

Dear Lender,

It’s that time of year when we make plans, we think about ways we want to give more, and make resolutions to change. So, I thought it would be a good time to talk about how we could improve our relationship…

This isn’t a break up letter dear Lender, this is me reaching out to try and make our relationship keep working for many years to come—because when your service works well we’re great together. There’s just a few glitches in the system that we need to work through!

Did you know that it took almost 280 pages of paper to get my mortgage with you?

That’s right, two hundred and eighty. How did that happen? I get that you need copies of my bank statements, information about my earnings, and a billion other pieces of information. But there’s got to be a better way, don’t we live in a digital world?

On its own 280 might not seem like a whole lot of paper to buy a home, but I’m just one person. In 2017 the US used over 2.2 billion sheets of paper to process mortgage applications. That means as a country we had 204,000 trees chopped down so we could print out digital documents.

In the long-run I think switching to digital files would be good for both of us, think of all the time your team could save if they didn’t have to print out hundreds of documents a day! Not to mention the reduced stress of not having to fix printer paper jams and reprint the pages that came out pink because you’ve ignored the ‘low ink’ warning for too long. And storing all of those paper files? Well, that’s just a fire hazard.

I understand that there’s regulations that you need to comply with and data security to worry about, but other lenders are able to solve these problems, can’t you too? I really want this to work between us, we’ve been together since I opened my first account and I honestly don’t want to move on, but I’d really like it if we didn’t need to contribute to deforestation the next time I buy a home. Could this be one of your New Year’s Resolutions, perhaps something to put on your Christmas list? I’m sure your CRO would approve.

While I’m here there’s a couple of other changes that could really help our relationship…

Like quick access to funds in emergencies.

It would make life so much easier if loans were credited to my account on the same day that I applied for them. The loan I needed to cover a car repair earlier this year took almost 72 hours to hit my account. I know that for you 72 hours doesn’t seem like a long time, but for me it meant that I had to pay for a Lyft for 3 days to get to and from work.

What made this more frustrating is that other lenders offered same day approval, but I’ve been banking with you forever, so I trusted you to provide a fair loan. Honestly, I was pretty tempted to try one of those mysterious fintechs I’ve heard about. Apparently they make an instant decision. I really wish you’d do this so I didn’t have to worry about when I’d be able to pay for unexpected emergencies. Do you think faster loans are something you could provide in the future? Perhaps it could all be completed online so I didn’t have to come down to the branch. I’m sure with the right technology your talented risk team could make this work!

This last request is really advice to help you get along with my friends better, after all, their opinion matters a great deal to me, especially when they say bad things about you. Those bad reviews can make it a little tempting to move on…

It would be really awesome if when they communicated with you that you saw them as more than a number.

While I get that traditional credit scores are a simple way of assessing applications, behind every application is a human who’s more than a number. After all, not everyone has been in the country long enough to build a credit history that bureaus pay attention to. And my immigrant friends aren’t the only ones who have struggled to build a traditional credit score. My friends that only use cash have also found it hard as their thin credit files make them difficult to understand. I’m sure there’s data that could tell you more about our lives than a traditional credit score does. Maybe you could look at more than our credit scores to dig deeper into our lives. With bank statements you could really understand how careful we are with money and other alternative data could tell you about our lifestyle.

So, instead of seeing a 550, you could see a recent immigrant with two kids who just secured a high paying job. Or a single mother working three jobs who consistently pays her bills on time but needs extra cash to pay for Christmas gifts. Is there a way you could see my friends as more than a number? How do other lenders do it? I’d love for you to see the bigger picture so my friends can take advantage of your great products too!

Sincerely,

(Redacted)

AKA Credit score: 610

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Guest Blog: Closing the Friction Gap in Lending

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Closing the Friction Gap in Lending

  • Don Chapman, Head of Strategic Partnerships, Powerlytics

Twenty years ago, day-to-day experiences such as bill payment and shopping were filled with hurdles and hassles, but consumers accepted these inconveniences because it’s all they knew. Today, smartphones, high-speed internet, and platforms like Amazon make many of these experiences a simple one or two click process. And as technology advances and each previous friction point is eliminated, we become even less tolerant when we are confronted with a complicated user experience or hurdles to completing a transaction.

Zero-friction Remains a Challenge for Banks and Lenders

While some industries have been highly transformed, zero-friction in financial services remains more aspiration than reality. While some financial processes have become a model of zero-friction – think of the ease of paying a friend with Venmo or the simplicity of online bill payment – account opening and loan decisioning are often cumbersome and frustrating for consumers. This is because banks and other lenders must follow strict regulatory requirements and sound credit risk management practices making it much tougher to simplify these experiences. In effect, this creates a “friction gap” for financial services providers. Consumers have moved beyond friction in many parts of their daily lives, so they become even more frustrated when dealing with the complexity that still exists in these financial interactions.

This is a particular challenge for banks and lenders. In fact in a recent webinar, Peter Wannemacher, Senior Analyst at Forrester, said abandon rates for online banking applications were at an all-time high of 97.5%.  While this percentage may be lower if we look only at loan applications, lending is a particular challenge because available data such as bureau scores are often not sufficient to make a fully informed credit decision. As a result, many lenders will ask the applicant to provide paystubs, tax returns, access to their bank accounts directly or through a third party, which results in a portion of these busy and creditworthy individuals choosing to avoid the friction and look for other options.

The Answer – Innovative Data Sources

The good news is that there are new solutions that can help streamline this process. The key for lenders comes down to data strategy and those lenders focused on identifying and integrating innovative new data sources are likely to gain a major competitive edge.

One example of an innovative zero-friction data solution is anonymized tax return information.  By simply using the loan applicant’s 9-digit ZIP Code, these data solutions provide accurate income estimates and confidence scores against an applicant’s stated income, giving any US lender the financial insights needed to enable a quick “yes” decision with zero friction for the loan applicant. For additional fine tuning of the estimate, knowing whether a person owns or rents their home provides an increased measure of accuracy. And because these solutions are based on tax data, they go well beyond the applicant’s W2 and cover all sources of income to provide a truly holistic financial view of the loan applicant.  The Office of the Comptroller of the Currency (OCC) has reviewed these income solutions and allows commercial usage to get to a “yes” in a loan decisioning process as well as other use cases including replacing stated income for proactive credit line increases and prospect targeting. 

Powerlytics provides this type of zero-friction income solution based on anonymized tax return data. Today, a range of banks and other lenders use Powerlytics True Income solutions to streamline loan decisioning and expand proactive credit line increases.  Powerlytics also offers a broad dataset of 5,000 financial variables delivering a comprehensive financial view of the over 200 million adults and 30 million businesses that comprise the American economy. Today, banks and lenders use this broad dataset to improve outcomes in prospect targeting, cross-sell, and portfolio risk analytics. 

While the friction gap remains a challenge to banks and lenders, those who actively explore innovative data solutions can accelerate their path to closing this gap and differentiate themselves in this highly competitive marketplace. Visit www.powerlytics.com for more information.

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