Data Ecosystem Lending |
4 mins read
Over 97% of businesses in Southeast Asia are made up of micro, small and medium enterprises. Of these, about 60% of these businesses are unable to gain access to credit due to a lack of traditional financial information, limiting their business growth. Such a credit gap presents a growth opportunity for financial service providers to grow their lending business while also supporting the growth of small businesses in the region. The alternate data generated from the digital footprint of such small businesses can help lenders cater to unserved borrowers to unlock business growth while enhancing the overall lending experience that can help lenders sustain such growth of their lending business.
Financial service providers can leverage the alternate data of their small business borrowers via unified APIs to optimise their lending process and gain actionable insights that can enable them to unlock and sustain the growth of their lending business. Here’s how:
Data-driven processes- Lenders can integrate with alternate data APIs to gain seamless access to small business alternate data and develop data-driven processes to leverage such data for actionable insights. Data-driven processes also help enable automation, and simplification of the customer journey and provide insights that help lenders make smarter and more informed decisions to grow their businesses.
More speed- While managing multiple data partners may be tedious and time-consuming, using unified APIs can help financial service providers gain access to alternate data from multiple partners in one place. Such APIs may provide access to validated data in a structured format that allows for ease of analysis, reduces effort and adds more speed to the process. Similarly, PowerCred’s API suite adds speed to the lending process by offering seamless access to data from multiple platforms with a single integration, structuring the raw data for ease of analysis, validating the data for fraud detection and offering intelligence to gain valuable insights from the alternate data for quicker decision-making.
Detection of fraud- Validating alternate data from multiple sources can help identify data discrepancies and flag potential fraud. Such early detection of fraud allows lenders to minimise the losses associated with such fraud as well as gives them the confidence to cater to new borrowers, enabling the growth of their customer base.
Expansion of market reach- PowerCred’s alternate data APIs have enabled financial service providers to approve borrowers previously rejected due to a lack of sufficient credit information. Leveraging alternative data from multiple sources can help gain insights into the business health, repayment capacity and credibility of small business borrowers, allowing lenders to gain confidence and serve even the ‘thin file’ applicants, expanding their market reach and customer base.
Enriched risk assessment- Alternate data can help lenders gain valuable insights for a comprehensive risk assessment in absence of substantial traditional credit information. This helps lenders enrich and add speed to their existing risk assessment process, enabling them to make smarter lending decisions to serve their customers better and to grow their business.
Customer confidence- Lenders can gain customer confidence by ensuring borrowers that their alternate data is being used in a safe and secure manner, without compromising user privacy and data security. Adhering to the relevant regulatory requirements and asking for prior consent from the users for access to their data can help build customer confidence, encouraging customer stickiness and loyalty in a competitive market.
Enhanced customer experience- Customer experience is crucial to differentiate and maintain stickiness in a highly competitive environment. Insights from the alternate data can help understand the dynamic needs of small business borrowers and build better products and customised offerings for them. This can enhance the customer experience for small business borrowers and can help lenders sustain the growth of their lending business.
While the need for credit is the reason small business borrowers approach financial service providers, their borrowing decision is driven by factors such as convenience and ease of application, speed of the process, the competitiveness of interest rates and their overall lending experience. Unlocking growth for the lending business by leveraging the alternate data of small business borrowers can help financial service providers to grow while maintaining relevance in the dynamic environment and sustaining such growth by differentiating themselves from the competition.
If you’d like to know more about unlocking growth for your lending business with alternate data, get in touch with us.