Accelitas/Fiserv Webinar discusses the value – and necessity – of inclusive lending to underserved populations
While fair and responsible practices have long been benchmarks for the lending industry, they haven’t gone far enough. Certainly not in a shifting landscape where millions of credit-seeking customers are literally invisible.
Financial inclusion is quickly becoming table stakes for the industry, and organizations must focus and innovate if they want to stay in the game.
That was among the key takeaways from a recent webinar cohosted by fintech leaders Accelitas and Fiserv: Financial Inclusion: 3 Keys to More Inclusive Lending, Empowering Equity, Innovation and Access for All.
Featuring financial data experts Jay Iler and Jeff Vander Linden of Fiserv, and James Cook and Jimmy Williams of Accelitas, the panelists shared views on the emerging market shifts, the challenges of addressing underserved consumers, and actionable steps to cultivate a more inclusive lending environment.
The status quo isn't working. And here's what it's missing.
“Anywhere from 40 million to 80 million people are in the credit invisible or underserved marketplace.” Williams told webinar viewers. “That's a massive number of the US population, so simply saying ‘I can't address that space’ isn't acceptable anymore. That's what we're hearing from the markets and regulators, and I think the drumbeats are going to get louder.” As for those 3 Challenges for Lenders?
Credit models are not reaching underserved populations
Credit reporting is a lagging indicator for consumer’s propensity
Credit data and scores are saturated and don’t allow for differentiation
Alternative data drives inclusive strategies
The good news: emerging technologies are quickly catching up with emerging markets. Regulatory agencies now recognize the growing use of alternative data by both banks and non-banks in credit underwriting and encourage responsible use of such data consistent with applicable consumer protection laws, including the Fair Credit Reporting Act. Webinar panelists had actionable advice for lenders looking to create more inclusive lending models: Target and accurately reach more underserved populations; leverage experienced alternative data analytics; and implement ML models tuned to your data waterfall. The predictive lift through alternative data reveals a broad base of customer experience that yields continuous improvement in performance, confirming that in addition to being more fair and equitable, financial inclusion is also good for business.
Or as Accelitas’ Williams put it, “Regardless of what type of lender you might be, whether you're a big Bank, a credit union, an installment lender, or in the automotive OEM lending space, you know the one easy way to grow your business is to expand your looks. Make sure that you are looking at every single customer that you possibly can. That's really at its core what this conversation is about, these strategies for inclusion.”