The world is constantly changing. In order for all of us to have the best quality of life, we all need to learn how to adapt and accept changes that can help us to make our lives better.
In recent years technology has stepped up to find new ways of helping us with our day-to-day life. Who would’ve thought just 20 years ago that robot vacuum cleaners will be a thing and that some of them can even come with a mop function? Or that you can rely on a little robotic gadget called Alexa to keep track of your grocery list, search the internet for the answers you need instead of you, play music for you, or even turn on and off lights for you. She can even tell jokes. That would sound like something unbelievable to our younger selves, and to some of us even our older selves.
Technology has made all of our dreams come true and so much more. Especially now in the time of the lockdowns and reduced social contact. We are spending more and more time inside and online and we had to adapt to it. But we are not the only ones. Businesses and organizations had to learn to adapt alongside us. They had to undergo digital transformation in order to transfer most of their functions online.
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What is Digital Transformation
There are a lot of technical definitions of digital transformation, but the most comprehensive defines it as the integration of digital technology into all areas of a business resulting in fundamental changes on how the businesses operate and how they deliver value to their customers, partners and employees. Being digital business means that you are closely attuned to how customer decision journeys are evolving. In the simplest terms, this means that the businesses and institutions are using digital technologies to create completely new business processes or modify the existing ones to operate better in the competitive market and to provide better service to their customers. All of the businesses need to go through digital transformation if they want to stay competitive as the customers’ expectations are also changing and they are looking for speed and simplicity that technology can provide.
In the most recent research conducted on 1,140 business executives, only 11% believe their current business models will remain economically viable through 2023. That means 89% of them have some thinking to do. And one of the biggest industries that need to step up their game is the banking industry.
All banks and financial institutions will have a website, some online service, and sometimes but not always they will have a digital app. Is that enough to keep the customers loyal? In this time and age, traditional banks and credit unions are no longer the only providers of financial services. FinTech companies and some tech giants like Google and Amazon are giving them a run for their money, especially when it comes to the area of online lending to help banks enlist the right KYC measures.
Rise of the online lending
With our lives becoming busier and more confusing than ever, nobody really has the will or the time to do anything in a more time-consuming way, especially if they don’t need to. Online lending helps us with that.
Standard lending was a time-consuming process that started with you filling out a loan application and then waiting for a bank to come back with an approval or denial of the loan. It would take even more time if you actually had to go to the bank or credit union to fill out the application as they haven’t entered the digital era. FinTech companies reduce that waiting period to minutes. This is great news for the customers, but it brings more risk to the lending businesses. We all know that cybercriminals don’t love anything as much as money, which puts this industry at the forefront of the fight against cyberattacks.
How credit card risk scoring helps online lending
The credit card risk scoring model can be described as a risk management tool that assesses the credit worthiness of a loan applicant by estimating her probability of default based on historical data. Traditional credit scoring would use a scorecard method that would include various factors like payment history, length of credit history, or recent credit inquiries. This traditional method is a bit outdated. In this time and age, we are surrounded by data that customers leave on every online step they take so why not use it to protect the customers and the business. This is where data enrichment comes into the picture. In simplest terms, data enrichment is a process of using information collected from additional sources to “enrich” or enhance the data you have. This is a base on which modern credit scoring processes are built and it is an irreplaceable tool in not only helping your business to make informed decisions but also in preventing fraud.
Having used data enrichment you can not only learn more about your users and by that reducing risk of account takeover but you can also improve the lending process for your customers by not asking them to fill out hundreds of fields and let the system do it for them.
Even though data enrichment is used on a daily basis by a large number of businesses, they are not completely informed about data enrichment tools and how to use them to protect their business.
By collecting data from third-parties or alternative databases you can create a complete and unique profile of the customers just by using their email or IP address, their BIN (Bank Identification Number), or even by their device. This can answer a lot of questions you need to ask yourself before lending them money. For example, it can show you if the email address was involved in previous data breaches, or is it a disposable email address, or even if it is registered to social media sites. The IP address can tell you if that IP is already on a spam blacklist or if the user is using proxies, VPNs, or TOR. Extremely important is also device data enrichment, or more commonly known as device fingerprint. All of your devices have a unique fingerprint which helps businesses detect fraud in the root as they can notice when something is different with your device fingerprint and take necessary steps in order to protect the customer and the business.
Don’t let the lack of knowledge damage your business. Learn what steps you need to take to protect your business and most importantly your customers.