A Winning Combination For Lenders: AI and Alternative Data

Posted by John Bennett on November 5, 2018

AI and Alternative Data

Artificial Intelligence (AI) is getting a lot of attention in the financial services market - and rightfully so. AI promises to deliver more accurate predictions of creditworthiness for lenders. It also promises to be useful in detecting fraud. In this blog, learn how lenders need more than AI platforms and new analytical models, to realize its full potential.

New Sources of AI Data

AI techniques such as machine learning learn to recognize patterns from studying vast amounts of data. But these techniques, impressive as they are, are of limited use when they are applied to the same old data that lenders have been relying on for years. They might be able to discover a few new patterns, but they’ll also recycle a lot of previous analysis based on the same limited data sets.

Along with AI, lenders need new and unique data. Specifically, they need alternative data.

What's Alternative Data?

It’s data beyond the traditional credit reports and FICO scores that have so long served as the basis for lending decisions. Alternative data is alternative along two different axes:

  • It includes data that is more comprehensive and provides a more complete picture of individual consumers.
  • It includes data about far more people, including the roughly 30% of U.S. adults about whom traditional screening services provide little or no data. This 30% includes Generation Z
    (the post-Millennial generation), immigrants, students, and military households.

As you may know, many experts predict the economy will experience a correction in the next year. That means lenders are going to have a much harder time picking borrowers and meeting goals for growth and profitability. In a tightening market, predictive analytics can make the difference between continued growth and financial stagnation.

Predictive Analytics Lenders Need

The combination of AI + alternative data turns out to be critical for addressing the most pressing issues lenders are facing today. These issues include:

  • Growing profits in an increasingly competitive and innovative market.
  • Finding good customers in a consumer market that is likely to experience a correction in the next year.
  • Verifying identities and making profitable lending decisions in real time.
  • Delivering that fast, frictionless digital experiences that younger customers such as Millennials and Generation Z (post-Millennial) consumers expect.
  • Defeating fraud operators, even as those operators leverage leaked identity data that is available for nearly every U.S. consumer.
  • Re-evaluating rejected applicants to ensure that no indications of creditworthiness have been overlooked and no profits left unrealized.

Ultimately, lenders need predictive intelligence that addresses all the challenges discussed above. At Accelitas, we call this complete solution Customer Identity Intelligence.

Customer Identity Intelligence

Customer Identity Intelligence allows companies to identify more good customers and deliver value throughout a customer relationship, enabling lenders to make more profitable decisions while delivering best-in-class service and greatly reducing fraud.

Our Accelerated Insight® API Platform delivers real-time Customer Identity Intelligence for lenders making credit decisions, and anyone else opening digital credit accounts, and provides them with the predictive insights they need for growing profits and reducing risk, even in a tightening credit market.

Want to learn how AI and alternative data address these issues?
Download our new white paper, 'Serving the Invisible Marketplace: Why Lenders Today Need both Artificial Intelligence and Alternative Data,' to explore the one-two punch that AI and alternative data can deliver.

READ THIS WHITE PAPER

 

 

Tags: Customer Identity Intelligence, Artificial Intelligence, Alternative Data