The business challenge
With substantial margins available, the SME lending market attracts both traditional and non-traditional lenders, with new entrants making this dynamic market more competitive.
Lenders in the SME market face unique challenges, often needing to make lending decisions with limited financial data and market information.
Traditional manual SME credit assessment processes are expensive in time and resources, and with SME customers demanding the speed of service they receive as consumers, lenders are turning to automation to achieve a consistent lending policy, reduce administration time and costs and meet customer expectations. However, automation has to be a balance between the ability to accurately assess an SME’s status and potential and achieving financial and customer service targets.
SME lenders are seeing a significant uplift in operational efficiency as skilled business managers are freed up to focus on high-risk, high value cases and higher business volumes can be dealt with using the same headcount.
The answer
Decision Analytics enables SME lenders to automate the application process and rapidly implement accurate credit risk management.
Experian’s proposition for origination in SME lending brings together robust application processing, data connectivity, decisioning technology, predictive analytics and expert consulting.
Data capture screens allow the accurate input, validation and enrichment of application data, including from commercial and consumer credit bureaux information, to give the right level of data for decisioning.
Workflow functionality drives the application automatically through the process, with integral fraud detection. The system applies tailored policy rules and calculates multiple scores for objectives. The scores can be calculated at customer level, consolidating commercial and personal data to build a comprehensive picture of the company, and the individual behind the company.
Once a decision is made to accept, segmentation enables appropriate terms of business to be assigned and final conditions to be set, such as the need to request identification, accounts or to carry out a face-to-face meeting.
Operators can benefit from:
- Increasing conversion rates, revenue and generate loyalty
- Decreasing operational costs
- Making the most efficient use of skilled resources
- Reducing bad debt and losses
- Achieving higher acceptance rates
- Achieving compliance with Basel II
- Continually improving business performance