Analyzing potential customers by credit providers primarily involves assessing creditworthiness. EnableNow, in collaboration with RiskQuest, offers a powerful set of tools to map the financial stability of a consumer or business based on bank transactions. In this article, we will explain how bank transactions can be used to better analyze customers, with the aim of making credit provision more efficient while mitigating risks.
Thanks to open banking, credit providers can access the transaction overview of a potential customer, including income, expenses, savings behavior, and debts. This data provides detailed insights into the customer's financial behavior and can help identify red flags or potential risks.
In our analysis, we analyze two main factors:
The combination of both factors provides an excellent indicator of credit risk.
To assess the ability to pay, we examine the available resources. Does a consumer or business have sufficient means to repay the debt? To determine this, we scan the bank transactions to look for the monthly income for consumers or cash flow for businesses. Crucial in this analysis is not only the average amount but also the stability and regularity of income. RiskQuest's intelligent models take into account variations such as holiday pay, salary increases, or other significant fluctuations.
Additionally, we analyze the spending patterns. For consumers, this includes fixed expenses supplemented by variable expenses. For businesses, we consider operational costs, IT expenses, lease payments, etc.
The combination of income, expenses, stability, and regularity provides a good indication of the ability to pay.
Willingness to pay can be determined by looking at morality and behavior. Bank transactions offer valuable insights in this regard. To assess willingness, we search for red flags related to payment behavior. We pay attention to factors such as bounced payments and potential transactions involving collection agencies and debt collection offices. For individual customers, we also consider life events such as marriages, deaths and unemployment. For business clients, we also look at other indicators to estimate their payment behavior.
Customer saving habits also provide valuable information. Regular savings can indicate financial discipline, which is a positive signal for willingness to pay. The same applies to early mortgage repayment.
Bank transactions are the key to faster and more cost-effective assessment of loan applications while making better-informed decisions and reducing risk. Could this be beneficial for your organization too? Then, please contact us! We'd be delighted to introduce you to the world of open banking.
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