The role of data in supporting accurate and appropriate decision making

By Louise Potts, Head of Banking Customer Advisory Practice at SAS UK & Ireland.

According to recent Bank of England figures, households’ borrowing using consumer credit surged to its highest annual growth rate in five years. This troubling statistic not only underscores the impact of the rising cost of living on the UK population, it also raises important questions for banks seeking to make accurate and appropriate decisions on all credit applications.

While there’s no disputing that for the most financially vulnerable the industry needs to be taking decisive action to support them, tackling issues such as fraud and financial crime remain a key priority. At the same time, banks need to quickly identify the customers in need of rapid assistance, proactively support them and agree on a robust plan to ensure they can meet essential payments.

Good quality data is key to achieving all these aims.

A changing landscape

It’s no secret that the banking industry, and financial services sector as a whole, has undergone a profound transformation since the COVID-19 pandemic at the start of 2020. In-branch interactions have significantly reduced and a growing number of transactions are being processed via digital channels, such as online banking apps.

Pre-2020, traditional lending platforms relied on human intervention and interactions at each step of the process, which resulted in increased processing times, potential bias during the application review process, and human error. Those days are gone thanks to new technologies.

The digital lending platforms we are all familiar with today can use real-time data to improve decision-making and significantly speed up the process for consumers. However, some incumbents have struggled to eradicate siloed data and keep pace with their so-called neobank counterparts, a problem many are looking to resolve.  

Developed with customer centricity at their core, neobanks not only operate on more agile systems, they can also deliver complementary services to consumers. From flagging better deals to providing cashback rewards and loyalty programs to their customers – the services are invaluable.

With the likes of Monzo, for example, you can simply fill in your personal details and get hold of a digital card within minutes of your application being approved. This digital card can then be linked to a digital wallet and you’re in a position to immediately start spending. It’s easy to see why a consumer would favour this option.

It’s this level of service that consumers have come to expect, however it’s impossible to offer without access to good quality and real-time data.

Making appropriate decisions

With consumer expectations rising, banks need to be in a position to exploit the technology available to them, harnessing data and turning it into actionable insight.

Not only will this ensure that they remain competitive and that all decisions remain appropriate and accurate, it will also drive down operating costs and remove inefficiencies.

For example, artificial intelligence (AI) and machine learning (ML) models allow banks to take a more strategic approach to controlling risk and ensuring accuracy, flagging anomalies or customer behaviour that may suggest a person is potentially moving towards a stressed financial situation. By picking up on potential indicators, banks can engage with the customer and help before that situation becomes a collections or recoveries engagement – this is better for the customer and the bank or financial organisation.

The continued adoption of Open Banking, and potential expansion into Open Finance, will further improve the experience banks can offer, removing many of the hurdles that are synonymous with causing customer frustration, such as the re-keying of data during the application process.

We are also seeing some banks starting to make use of hyperautomation – a term defined as the simultaneous use of digital operating systems, workflow, robotic process automation, and artificial intelligence – typically via the cloud. This enables organisations to deliver high value autonomous processes through intelligent decisions, leading to a faster and better quality service.

With the cost of living showing no sign of easing and a growing number of consumers being forced to increase their reliance on borrowing, it’s clear that banks will need to deploy a range of new technologies, designed to speed up customer processing and improve the accuracy of the decision-making process.

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