As we begin to recover from the pandemic, there’s no established playbook for lenders to balance the risk of extending credit, preventing delinquency and continuing to support customers with excellent customer service. It’s become abundantly clear that better, more accurate tools are sorely needed. As Mastercard® continues to support financial institutions with their revolutionary technologies, this year’s Lendit Fintech 2021 was an opportunity to showcase their most recent ID Verification portfolio and present the power of Brighterion AI in their credit risk suite.
Mastercard ID Verification reduces losses and improves customer service
In 2018 $3.4 billion in losses for U.S. lenders resulted from failing to accurately assess the identity of new applications, which is where Mastercard’s ID Verification comes into play. It’s a suite of API-based identity verification services that delivers better approval rates, minimizes online account fraud and creates a better user experience. A diverse set of real-time identity proofing requirements, leveraging attribute verification, phone intelligence and document verification, protects businesses by reducing identity fraud and friction for customers who are opening bank accounts or applying for mortgages or loans. At LendIt, Sarah Clark, Senior VP Digital Identity Solutions Mastercard, shared a demonstration of ID Verification in action that you can watch on Mastercard’s ID Verification page.
Mastercard ID Verification portfolio suite of services:
Verified form fill
Attribute verification
Mobile authentication
Mobile trust score
Document verification service
Document source verification service
Income verification
Manage credit risk and improve the customer experience with AI
Amyn Dhala, Vice President, AI Express, Cyber & Intelligence Solutions – Global, Mastercard, and Leslie Parrish, Senior Analyst, Consumer Lending, Aite Group shared their expertise in a fireside chat – Artificial intelligence and managing the credit risk lifecycle. Amyn and Leslie discussed the importance of investing in AI technology that supports both a business and its customers.
Some of the largest global lending institutions have reduced default-related losses by up to 32% using Brighterion AI. A borrower application that’s supported by AI – which often approves customers for loans who might be declined in a manual review process – paired with ID Verification, reduces friction in the onboarding experience. Being able to accurately assess a customer’s situation and predict delinquencies early enables lenders to connect with customers and offer support by creating a plan to prevent delinquency and charge offs. Extending more products to customers whose data shows their ability to manage more credit is another advantage and helps create an excellent borrower experience. This results in increased customer retention and the ability to attract more qualified borrowers. With these clear, compelling benefits, it’s no surprise that 88% of banking executives plan to invest more in AI for credit risk in the next two to five years.
In summary, using AI to manage credit risk:
- Improves the customer experience with accurate scoring to reduce friction.
- Allows lenders to predict losses earlier, meaning credit risk managers can be proactive rather than reactive.
- Speeds up the onboarding process, making managing existing customer relationships easier and helps identify opportunities to get credit into the hands of borrowers.
- Enables actionable insights and the ability to make better predictions by leveraging all available data across your organization.
Lenders can manage risk proactively with AI
Improve the
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Predict losses
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Manage risk
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AI Express in action
As financial institutions (FIs) increasingly recognize the benefits of using AI to manage credit risk, they’re also looking for ways to implement AI quickly and efficiently with little risk and without disrupting their current operations. AI Express is another powerful implementation process from Mastercard that’s a great way to experiment with AI technology and quickly see a proof of concept. Takeaways include an opportunity to compare AI Express results against existing AI solutions, an ROI-based business case for proof of concept and a future-proof deployment plan.
In one real-life example, a large global bank challenged Mastercard to create a credit risk model to predict which customers would go delinquent on their credit card payments. Using AI Express, Mastercard developed a model that incorporated a range of data, including historical account details, bureau data, credit card transactions, and payment history. The model was able to identify $50M in preventable credit losses. In addition to identifying massive savings, it was done without impacting the customer experience, which was one of the bank’s key objectives. The model also predicted these delinquencies an average of 70 days before the delinquency occurred, which gave the bank time to take action and collaborate with their customers.
As we move towards recovery after the pandemic, we’re seeing lenders focus on portfolio management, investing in technology for collections and upgrading omnichannel communications to improve messaging to customers. Proactive lenders don’t want to be behind the eight ball reacting to what’s already happened; instead, they want to know what’s happening in real-time or to be able to predict what’s going to happen. Tools such as ID Verification by Mastercard and AI Express help empower them to do just that.
Learn more about ID Verification by Mastercard and watch Sarah’s demonstration here. You can also watch the full replay of Amyn and Leslie’s LendIt presentation, Artificial intelligence and managing the credit risk lifecycle, for more insights into managing credit risk and improving customer relationships with AI.
