Don't ask the applicant
- 13 Oct
Of the many interesting topics discussed at Lendit earlier this week, the one that caught my attention most often was the future of underwriting. Strange for a marketer you might think, but I happen to believe that the customer experience is at the very heart of marketing and the companies that succeed in making the application and approval process fast and frictionless, will be the ones that win out in the end.
I was impressed and scared in equal measure by some of what I saw.
Let me get the scare story off my chest first. One overseas platform proudly showed a mechanism by which it trawls social media profiles – not just to validate identities, which would be reasonable, but to work out the sort of establishments users visit, where they go on holiday and the type of people they associate with. No doubt it's all very clever from a technical standpoint, but I shudder at the invasion of privacy. Good luck to their PR team - and lawyers – with that one.
In complete contrast, outside lots of ideas on big data, credit scoring and pulling data from cloud accounting systems and bank accounts – all with permission of course – I had a real ‘wow’ moment listening to Zaydoon Munir of Revolution Credit. Zaydoon is ex-Experian and, with his team, has devised a series of fun, online psychometric tests that measure conscientiousness, mobility and propensity to climb: factors that have been shown to have a significant correlation with the ability and willingness to repay.
As a user of psychometric testing in our recruitment process, I am a great believer in its predictive power and completely get how it can be applied in a lending scenario. This is a massive shift from the backward looking approach of reviewing accounts and bank statements and gets right down to determining the ability, stability, skill and will of a borrower that every lender looks for. (Whether we can ever move underwriters away from the comfort of audited accounts and 6 months bank statements is a different question!)
The quest in all this, call it the holy grail, is not to have to ask the applicant for any information. If a lender achieves that, it not only makes it quick and easy for the applicant, it removes the risk of rosy stories being spun by cash hungry borrowers and outright fraud.
A business lender that can make a decision on one simple application - that’s a proposition I would love to market.