Research and Markets: Insight Report 2015: Digitization in Lending - The ...
DUBLIN--(BUSINESS WIRE)--Research and Markets (http://www.researchandmarkets.com/research/bl9wvf/insight_report)
has announced the addition of the Insight
Report: Digitization in Lending report to their offering.
The Insight Report: Digitization in Lending analyzes the effect of
digitization, emerging trends and competitive landscape of the lending
industry. The report also discusses in detail the drivers of
digitization for financial institutions and how they are using it for
improving operational efficiency and customer experience.
With significant adoption of digital channels by customers, financial
institutions are compelled to provide the convenience of anywhere,
anytime banking to customers. Although digitization has transformed the
transactional banking process, it has not been fully adopted in lending
Many online lending companies and non-bank lenders have emerged to
capitalize on the inefficient lending process of banks. The growth of
these companies also demonstrates that customers are looking for more
convenience, which digitization can provide. The significant rise of
non-bank lenders has led banks to invest more in digital technology, and
form partnerships with them to remain leading operators in the lending
- Manual loan and mortgage application processes make the lending system
slow and expensive.
- Digitized loan applications reduce paperwork and manual errors
involved in the process.
- As digital banking grows worldwide, customers require reliable and
seamless loan application and disbursal over multiple channels and
- Digitization of lending is likely to provide the most cost-effective
solution for reducing increasing compliance costs due to enhanced
- Enhanced adoption of digital channels, and inefficiencies in the
traditional bank lending system have led to the launch of online lending
- Financial institutions have encountered various challenges in
digitizing the lending process. Lack of sophisticated software
solutions, concerns over compatibility of new systems with legacy
systems, costs of transformation, regulatory compliance, and management
and budget restrictions have all deterred banks from digitizing the
- With the increasing presence of alternative lenders, banks are
investing in technology, forming alliances with emerging financial
technology companies, and adopting new credit scoring methodologies.
Key Topics Covered:
1 Executive Summary
2 What is Driving Digitization in Lending?
2.1 Growing Need for Enhanced Customer Experience
2.2 The Quest for Operational Efficiency
2.3 Impact of Changing Competitive Landscape
3 Digital Transformation of Lending in Retail Banks
3.1 Front-End Digitization
3.2 Back-End Digitization
4 Challenges in Digitization of Lending
5 Case Studies
5.1 Enhanced Efficiency with Paperless Loan Processing by US Bank
5.2 First Internet Bank - the Digital Platform of Lending
5.3 Bank Dhofar - Automation of Loan Origination Improved Efficiency
5.4 Zopa - a Pioneer in Peer to Peer Lending
5.5 HDFC Bank - Banking on Digitized Personal Loan Product
6 The Way Forward for Digitized Lending
Companies Mentioned - Partial List
- HDFC Bank
- Wells Fargo
- US Bank
- First Internet Bank
- Association for Information and Image Management
- Thomson Reuters
- Consumer Financial Protection Bureau
- Astoria Bank
- Wolters Kluwer Financial Services
- Bank of America
- BAI Banking Strategies
- Lending Club
- Funding Circle
- Quicken Loan
- Goldman Sachs
- Royal Bank of Scotland
- Santander Bank
- BBVA Compass
- Tesco Bank
- United Overseas Bank
- State Bank of India
- Barclays Bank
- Commercial Bank
- Bank Dhofar
For more information visit http://www.researchandmarkets.com/research/bl9wvf/insight_report
Could Your Social Media Footprint Step On Your Credit History?
In December 1912, financier John Pierpont JP Morgan testified in Washington before the Bank and Currency Committee of the House of Representatives investigating Wall Streets workings of the time.
The fascinating record produced from the testimony called him the uncrowned king of finance and recounted this exchange between Morgan and the committees lawyer, Samuel Untermyer:
Untermyer: Is not commercial credit based primarily upon money or property?
Morgan: No, sir, the first thing is character.
Untermyer: Before money or property?
Morgan: Before money or anything else. Money cannot buy it.
Further on, Morgan also produces this financial proverb material: A man I do not trust could not get money from me on all the bonds in Christendom.
A century later, this memory has found new life in a growing number of stories about alternative ways of calculating credit scores, apparently promoted by the co-founder of a startup called Lenddo.
Its a modern-day iteration of the idea of character as a commercial value: companies going online to try to figure out your financial potential from posts and connections from Facebook, Twitter and, yes, LinkedIn (professional contacts there are especially revealing of an applicants character and capacity to repay, another creditworthiness startup founder told the Economist, in 2013).
The latest wave of coverage comes from a story in the Financial Times about FICO, the credit scoring company, headlined: Being wasted on Facebook may damage your credit score.
The FT says FICO is developing a way to price loans to millions of people who have historically been off the grid and so the firm is looking at data on a spectrum from credit card repayment history to information volunteered on Facebook or other social media.
If you look at how many times a person says wasted in their profile, it has some value in predicting whether theyre going to repay their debt, FICO CEO Will Lansing is quoted in the FT as saying. Its not much, but its more than zero.
If you get the impression that FICO might use your Web posts to dock your credit scores, youre not alone. But heres a clarification from FICO spokeswoman Christina Goethe:
The headline about social media posts created a misperception. FICO is not utilizing Facebook data, or any other type of social media data, in calculating FICO Scores. Mr. Lansing was talking generally about the fact that different types of data have different levels of predictive value.
What FICO is doing is piloting a new type of score, called FICO Score XD, which would add telecom and utility bills (from another credit reporting company Equifax) and property and public records (from LexisNexis) to its calculations to score people who cant be scored otherwise, for instance those without a credit history.
Goethe, in an email, explains how it works:
FICO Score XD is currently designed to only score consumers that are not scorable with traditional credit data. The algorithm checks to determine if a traditional FICO Score can be generated first, and if it can, the traditional score is returned to the lender. If it cannot, FICO Score XD provides a second chance to get approved. The goal of FICO Score XD is to expand access to credit.
OK, but what if FICO, or Experian, or Equifax, or TransUnion, or their smaller rivals do decide to take social media data into account in building your file, and not just to prevent fraud? Their consumer reports can be used not just for loan and credit card decisions, but also hiring, insurance and housing.
Knowledge Is Power
The first thing to know is this: You have to be told if information from your file has been used against you.
Bob Schoshinski is an assistant director in the privacy and identity protection division at the Federal Trade Commission. He says if your consumer credit data causes a bank, an insurer or landlord to reject your application or give you worse terms than you could have gotten, they have to give you whats called an adverse action notice.
Its the kind of notice, Schoshinski says, that explains: We rejected your application or gave you a worse deal because of your credit report or score, and heres where we got the report or score and here are the major factors that determined our decision.
Employers who want to peek in your background through a credit or consumer report have to give you even more of a heads-up with a pre-adverse action notice, Schoshinski says, in case potential hires want to dispute anything on their report before a decision has been made.
And thats another thing you can do under the Fair Credit Reporting Act: Make sure that your information is correct, wherever it may have been collected. Consumer reporting agencies must investigate disputed information and then correct or delete things that are wrong, incomplete or unverifiable.
Generally speaking the FCRA is neutral as to what kind of data a credit reporting agency, or a lender, or an employer uses, including social media, Schoshinski says. You have to have procedures that assure a maximum possible accuracy of the information youre providing.
The FCRA also prohibits credit reports from including negative stuff thats more than 7 years old (for instance, arrests) and leaves no room for shady uses of credit reports: If a bank, insurer, employer or landlord doesnt acknowledge that their decision stemmed from a credit report, then theyre violating the law, Schoshinski says.
When Youre Found Online Directly
Things get murkier when the social media data is collected not by consumer reporting companies, but banks/employers/property owners/insurers themselves. Those instances are not overseen by the FCRA and are guided by other anti-discrimination laws and ethics standards (for example, fair housing laws), whose relationships with social media are still getting sorted out, too.
NPRs Yuki Noguchi has delved into the thorny issue of employers sleuthing on social media accounts of potential new hires. She found hazy rules of what hiring folks can do with the information the a job seeker makes publicly available, especially given that discrimination can be hard to pinpoint when its based on intangible and sometimes subconscious impacts of things like scanning a Facebook page.
The Equal Employment Opportunity Commission took on the topic in March 2014, issuing a recap press release with this note from panelists observations: To the extent that employers conduct a social media background check [to identify and recruit good candidates], it is better to have either a third party or a designated person within the company who does not make hiring decisions do the check, and only use publicly available information.
Spokeswoman Kimberly Smith-Brown says that workshop remains the EEOCs latest formal action on the topic of social media.
The FTCs Schoshinski says: Our main concern is about consent. If someone wants that information to be out there and wants to put information out about themselves, through social media or otherwise, then that shouldnt be a concern.
But if theres information that someone either doesnt know is going to be put out there or hasnt been told if they enter information here, its going to be shared with thousands if not millions of people, then that can become a problem.