By Barley Laing, the UK Managing Director at Melissa
Data is the lifeblood of financial institutions. Decisions about lending, credit approvals, fraud checks and investment strategies depend on understanding who the customer really is, not just what’s on the completed application form.
This is why enriching data is becoming so valuable. By adding relevant customer, business, geographic and behavioural attributes to existing records, those in financial services can gain a more complete picture of their customers and make more informed decisions at scale.
Start with a strong data foundation
Before enriching data it’s vital to have up to date, verified data on customers. This is because a record enriched on top of an incorrect address, invalid email or unresolved identity doesn’t become smarter, just more confidently wrong.
For example, if an application for a loan contains an outdated address or mistyped email and is then enriched by a financial institution with data on income estimates, employment information, behavioural indicators or other attributes, there’s a problem. The organisation will end up making decisions using a record built on information that hasn’t been properly verified.
Therefore, data verification processes must be in place before enrichment, not after it. It’s why data verification and enrichment work best as complementary steps. Verification confirms that key customer attributes such as name, address, phone number and email address are accurate and usable. ID verification can then establish whether those elements are consistent with the person presenting them. Data enrichment adds further context to that trusted record, aiding financial institutions in building a more complete customer view.
Skipping the verification process can simply scale errors already present in the data. However, once customer data has been verified, enrichment can support a range of actions, including more effectively assessing loan applications and improving personalised customer communications, through to fraud prevention.
Enriching data to avoid fraud and support compliance
When it comes to combatting fraud enriching data can’t alone prevent the likes of synthetic identity fraud because it doesn’t determine whether the underlying identity is genuine. What it can do is provide additional context to verified data, such as historical or geographic information associated with an identity, helping risk teams assess suspicious applications more effectively.
Additionally, enriched data can support KYC and AML compliance by providing those in financial services with a broader view of a customer’s profile, including business relationships, geographic information and other risk indicators. Although enrichment does not replace ID verification, it helps to add context. After all, a more detailed customer profile is only useful when the financial institution can have confidence in the identity and core information behind it.
Enriched data informs lending decisions
Access to a credit score only informs part of the story when it comes to making lending decisions. The additional information provided by enriching data with the likes of verified income, employment history and relevant behavioural signals offers lenders a broader view of an applicant’s financial circumstances, without the applicant having to manually provide all this information.
Personalisation and customer retention
Customers increasingly expect financial institutions to understand their personal needs. Data that is enriched and verified can help organisations to identify relevant customer characteristics, life stages and financial signals, and use those insights to deliver more targeted products, services and experiences. For instance, a bank may be able to identify a customer who will benefit from a particular financial service based on the information in their personal profile.
Also, combining accurate customer contact data with enrichment data can create more relevant customer segments and deliver communications based on a more complete understanding of the customer, supporting retention.
Verify and enrich data for smarter decision making
Those in financial services gain a genuine competitive advantage by enriching data, but its value depends on the quality of the data being enriched. Organisations that verify first and enrich second are better positioned to make confident decisions, whether they’re assessing loan applications, onboarding a new customer, supporting their customer compliance processes, preventing fraud, or delivering a personalised offer.
Remember, the objective is not to have more customer data, but more trustworthy data that can be used with confidence to support smarter decision making and drive revenue.