Three Paths to Consumer and Auto Lending Success

In a recent post, we talked about alternative consumer credit data that is helping banks and credit unions make more loans to underserved borrowers who lack traditional credit files.  

There are millions of prospective borrowers who have either very thin credit files or no files at all. Yet, they still could qualify for a consumer or auto loan if all of the data relating to their ability to repay the loan is considered during the underwriting process.  

Our best estimates, based on our experience providing 3 million credit decisions based on this data, is that the average lender could double the number of loans they approve by considering this data.  

How exactly does this work? In our recent report, we discuss the specific strategies and tactics on how financial institutions can earn more revenue while better serving more borrowers. We’ll break down a few key highlights here.   

Three tools every bank and credit union should have 

To make the most of the alternative credit information that could help successfully underwrite more borrowers, financial institutions need a partner capable of bringing together a wide variety of information through APIs and then make it available to the lender’s decisioning software. 

As Lokyata worked to build out such an offering for our lenders, we found three areas that offered the most benefit and built solutions to fit each need.  

BankAnalyze 

After an applicant provides permission via text or email, Lokyata’s BankAnalyze uses APIs to source the borrower’s bank statement data, which can then be reviewed through a configured criteria that renders an instant Approve, Deny, Manual Review credit decision recommendation. Simply put, BankAnalyze reads bank statements which provides more granular insight into borrower's financial history very quickly.  

The end-result is more borrowers served while drastically reducing manual reviews. When used in combination with an applicant’s traditional credit score, this product serves as a very effective risk management layer that allows you to safely prime near and subprime borrowers. 

ExcelRate 

This solution deploys and supports lead campaigns and underwriting currently for auto and consumer lending. With this tool, Lokyata pulls in data from a variety of sources (traditional bureaus, subprime bureaus, bank statement data [international], telecom data, fraud network data, ACH etc.). Then, pre-determined filters, lenders can leverage this intelligence to create a full financial profile on the borrower. Leveraging our technology to automatically survey the characteristics of the applicant against the data that is pulled, we filter them through workflow stages to make a lead purchase decision.  

FraudBlock 

Risk management and security is top-of-mind for any lending organization. In order to ensure KYC/AML compliance, Lokyata’s FraudBlock validates the applicant’s name, email address, IP address, physical address compared to the lender’s existing data to ensure they aren’t interacting with a bad actor. The information is also run through various fraud networks for additional layers of detection. 

This is critical for avoiding synthetic ID fraud, in which a criminal uses a combination of real and fake personal information to create an identity and commit fraud. This can include a stolen social security number with a fake name, date of birth and address to create a new identity that they can then use to trick lenders.  

Read our latest report, How Alternative Data Contributes to Fair Lending Decisions for Borrowers Affected by the Pandemic, to learn more about you can start serving more deserving borrowers -- and earning more revenue -- today. 

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