Powerful platforms are transforming the world of credit risk decisioning management. Across the globe, leading providers are deploying these advanced technologies to make better, smarter decisions about their existing and potential borrowers.
In this article, we’ll explore how this technology is streamlining credit risk decisioning. With a focus on the key challenges and opportunities in today’s marketplace, we’ll provide creditors with a path towards operationalizing intelligence within their organization.
What is credit decisioning?
At its core, credit risk decisioning is the process of evaluating a potential borrower’s creditworthiness. Creditors use it to determine the level of risk associated with extending credit or lending money towards an individual, which helps them approve, deny, or set the terms of the loan.
Historically, providers have manually conducted credit risk decisioning processes. In these instances, each individual loan officer becomes responsible for examining the financial history of the borrower placed in front of them. These officers have to rely on the information available to them—combined with their best judgment—to determine that person’s creditworthiness.
Naturally, relying on a manual credit risk decisioning process comes with its own set of issues. Even the most well-intentioned loan officers have been known to make mistakes or miss out on a few key details when evaluating a borrower’s financial history. All humans are a little different, making it almost impossible for creditors to establish consistency across a variety of different loan officers.
Even worse, manual decision-making tends to be highly inefficient. Loan officers waste time searching through financial records by hand. As a result, processing backlogs are all too common. Potential borrowers can wait weeks, if not months, to receive their decision. Given the clear link between faster processing times and improvements in customer satisfaction, these delays make all the difference when it comes to long-term loyalty to your brand.
While some institutions continue to rely on manual credit risk decisioning, today, most have transitioned to decisioning platforms designed specifically to address these concerns. These automated decisioning platforms improve accuracy, efficiency, and consistency, leading to better outcomes for creditors and lenders alike.
How does credit risk decisioning work?
At the most basic level, credit decisioning platforms ingest data from any system or data source, such as a debt collections solution or a communications tool. Advanced analytic capabilities provide results in real time, and then, that result is used to make a decision.
However, it’s important to keep in mind that not all credit decisioning platforms are created equal. The most advanced solutions come with additional features and functionalities designed to effectively operationalize intelligence throughout your organization. Let’s explore what to keep in mind when implementing data-driven decisioning platforms.
Flexibility and configurability
Today, you’ll find that many companies have adopted a segmented approach to decisioning. Rather than working from a centralized system, each department adopts it own approach to writing rules and applying them within their tools of choice. As a result, internal IT teams have to work overtime to connect these systems to ensure the right information is pulled together for the best possible results.
The right credit risk management platform empowers you to take a more unified approach. By bringing together multiple data points, including income, credit history, and outstanding debts, creditors are provided with a much more well-rounded picture of the potential borrower. Fast, streamlined access to the data you need leads to more efficient and effective risk assessment.
Intuitive, user-friendly UI
The most advanced credit risk decisioning platforms encourage more collaboration within departments as well. Thanks to their low-code/no code frameworks, these cutting-edge technologies cater to all levels of expertise. Both technical and business users are empowered to author, test, and manage rules in a way that’s comfortable for them.
As a result, it’s easy to tackle new tasks and reduce bottlenecks by ensuring all staff are involved in the decision-making process. You don’t need to be a data scientist to tackle new problems, streamline workflows, or analyze results. Simply switch the display to a more simplified look or take advantage of graphical displays to visualize results in a clear and understandable way.
Visibility and transparency
Taking a more unified approach increases transparency into the decision-making process. Visual, user-friendly interfaces encourage all team members to get involved in examining outcomes, sharing input, and operationalizing feedback. Data scientists can use their technical expertise to speed up processes, reduce inefficiencies, and streamline workflows, while business users can provide real-world insights to ensure these capabilities are leveraged to maximum effect.
As an example, if you’re looking to create a set of rules for pre-scoring loans, you can load data straight into the decisioning tool to see the physical result in real time. This visual-first approach helps you pick up on potential discrepancies before taking it live. You can also analyze these outcomes through easy-to-read graphs and charts. Compared to other tools, which force you to painstakingly export outbound results into a spreadsheet, you can view these graphs straight from the platform’s interface.
Operationalize credit risk decisioning with C&R Software
Clearly, credit risk decisioning platforms are transforming the way creditors engage with potential borrowers. With the right technology stack, your company is empowered to reduce workloads, speed up processing times, and enhance accuracy—all while providing a better experience for your customers.
Already, countless industry leaders are leveraging advanced credit risk decisioning platforms to minimize risk and maximize results. If you’re looking for credit risk decisioning technology that’s intuitive, configurable, and user-friendly, it’s time to get started with FitLogic. This highly flexible decisioning platform is capable of optimizing outcomes across your entire organization, from originations to marketing to pre-delinquency. Technical and business users alike are empowered to leverage these AI-native debt collection tools for maximum effect. Request a demo to learn more.
