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Experian’s new global report is now available on how businesses can enhance efficiency, insights, and growth through integration to transform the future of risk strategy. Download report In the ever-evolving financial landscape, the convergence of credit risk, fraud risk, and compliance is becoming a game-changer. Financial institutions (FIs) increasingly recognise the need to integrate these functions to enhance efficiency, gain deeper insights, and drive growth. The 2024 global report on the convergence of credit, fraud, and compliance sheds light on this critical transformation, emphasising how a unified strategy can revolutionise risk management. The report highlights the importance of convergence in shaping the future of financial services. We surveyed 750 leaders in credit risk, fraud risk and compliance in financial services organisations across the world. Inside the report: The need for convergence As technology advances, financial institutions (FIs) face the dual challenge of managing complex systems while simplifying consumer processes. The report reveals that organisations use an average of eight tools across credit, fraud, and compliance, with some using more than ten. This fragmentation leads to inefficiencies and increased risks.In addition, 79% of respondents want to work with fewer vendors to manage credit risk, fraud, and compliance, underscoring the need for streamlined operations. Independent evolution of functions and associated challenges Credit risk, fraud risk, and compliance functions have evolved independently, creating operational silos and technology management challenges. This separation has led to increased fraud and credit losses. The report highlights that only 9% of organisations prioritise these functions equally, with most focusing on fraud. However, 87% of respondents acknowledge the overlap between these areas and are working towards closer collaboration. Regulatory pressures and advanced fraud techniques New regulations in the US, UK, and EU are compelling FIs to reimburse consumers for losses due to scams, increasing the liability for both sending and receiving banks. Penalties for failing to implement effective Anti-Money Laundering (AML) solutions have also intensified. These regulatory demands and advanced fraud techniques necessitate a more integrated approach to risk management. Early stages of convergence While the market is beginning to recognise the benefits of convergence, many FIs are still in the early stages of this journey. The convergence speed varies, but mature organisations have already started or plan to start the process soon. The report shows that 91% of respondents believe that forward-looking companies will centralise these functions within the next three years. However, only 15% prefer a ‘point solution’, 36% prefer a single integrated solution, and 49% prefer modular integration. The role of technology Technology plays a crucial role in integrating functions and managing risk. Next-generation platforms are essential for adapting to market needs, delivering innovative products, and meeting regulatory requirements. The report emphasises the importance of data aggregation, which combines diverse data for deeper insights, and the integration of credit decisioning and fraud detection solutions to balance risk and growth goals simultaneously. Improving risk management through alignment Correctly identifying consumers, managing fraud risk, making informed credit decisions, and ensuring compliance share common ground. The report shows that 57% of respondents believe aligning credit risk, fraud, and compliance functions leads to better overall risk management. Businesses with more centralised practices report improved risk management effectiveness, operational efficiencies, and data integrity. Benefits of convergence The convergence of credit risk, fraud, and compliance offers numerous benefits, including: Improved risk management effectiveness: Better alignment leads to more effective risk management strategies. Operational efficiencies: Streamlined processes and reduced duplication of efforts enhance operational efficiency. Increased data integrity: Centralised data management ensures consistency and accuracy. Cost reduction: Consolidation of functions and technology reduces costs. Enhanced customer experience: A unified approach improves customer recognition and service across all channels. Read the report to find out how to prove value through integration. Download report

Credit professionals from a range of banks, telcos and financial services businesses gathered in London’s Kings Place in June for one of the highlights of the Experian decisioning community: FutureForum. We take a look at the highlights.

Lenders are using automation across the credit lifecycle and intend to invest further in the next 12 months. We look at the use cases for automation and address the key challenges lenders face when automating decisions.

Donna DePasquale, EVP, Global Decisioning Software, talks to Bloomberg Quicktakes about the key findings of the latest Global Decisioning Report.

As we enter the beginning of the end of this global crisis, the role of data, analytics, and credit risk decisioning takes on even greater significance than before. Consumers face uneven roads to recovery, with some ready to spend again and others still mired in pandemic-related financial stress. And businesses of all sizes report their operations are recovering but there’s still a way to go. A key difference we saw is that companies that adapted to serve customer needs digitally are faring much better. Our 2021 Global Decisioning eBook, Navigating a new era of credit risk decisioning, looks at how consumers are stabilizing their finances and how businesses are returning to growth. A recent survey among 9,000 consumers and 2,700 businesses across ten countries worldwide reveals the importance of lenders prioritizing digital transformation, and the role of advanced data and analytics in enhancing the customer experience. The pandemic fall-out is impacting everyone differently: 1 in 3 consumers remains concerned about their finances – paying bills and managing credit Whereas high-income households are no longer reducing their discretionary spending Navigating this varied credit landscape requires a deep understanding of customer needs on both ends of the spectrum. However, business confidence in the consumer credit risk management analytics models dropped over the past year from 71 percent to 61 percent. Smaller lenders with revenues ranging from $10M to $49M have seen the sharpest decline from 72 percent to 57 percent in the past six months. Adapting data and analytics to a rapidly changing customer base: Almost 50% of businesses surveyed said their dedicate more resources to enhance analytics One-third of businesses are planning to re-build their models from scratch Recalibrating credit models is one thing, but lenders also need to rethink their data sources to better understand current customer profiles. The data inputs generated by the pandemic have impacted credit risk models and machine learning applications in unexpected ways. For example, widespread payment holidays and government stimulus programs may be masking customers’ true financial circumstances. According to Recovery Insights, a separate study published by Experian North America: Delinquency prior to the pandemic is a strong indicator of future risk. Accounts exiting an accommodation period are 2x more likely to become delinquent than are accounts that never received an accommodation. Payment on debt during accommodation indicated a reduced risk for subsequent delinquency. Amidst the pandemic lockdown, consumers turned online to manage finances and connect with lenders – including older consumers.  And while the pandemic pushed consumers online out of necessity, now that they’re there – it’s become a preference – as overall digital gains are holding above pre-pandemic levels. Lenders have a new digital imperative to meet consumers’ evolving needs for continued digital engagement. Consumer expectations of digital experiences 55% of consumers have higher expectations of their digital experience since Covid-19 began 43% of consumers surveyed age 70+ reported digital banking throughout the pandemic 14% of consumers surveyed age 60-69 applied for a new loan or card online The importance of a digital-first approach has revealed itself and many companies have put a digital customer journey in place since Covid-19 began. The future, however, is more than providing online services. It’s about knowing your customers well enough to anticipate their credit needs and using tools to automate the process and reduce risk. Adapt or lose customers 9 in 10 businesses have a digital customer journey in place 1 in 4 consumers have taken their business elsewhere because a company didn’t adapt to their digital needs Online customer experience and credit risk management are more connected than ever before. And, businesses need technology that supports the entire customer journey, from onboarding to customer management to collections. Five digital investments businesses are prioritizing the new era of credit risk management: Implement new machine learning models for customer decisions Increase digital acquisitions and engagement Understand their customer base (affordability, value, behavior) Automate customer decisions Increase value of existing customers Access the report here to get more consumer trends and find out what the future of decisioning means for businesses looking to return to growth. Stay in the know with our latest insights:

Marika Vilen, SVP of Global Partnerships at Experian Identity & Fraud, stresses the importance of collaboration for professional and business growth.