How Lenders Can Utilize Their Data as a Product

I had the pleasure of addressing 500+ John Deere Financial employees as the keynote speaker during their quarterly company-wide meeting. I shared my thoughts on how lenders can utilize their data as a product to drive innovation by partnering with Fintechs. Here are the highlights from the presentation.

What is Data as a Product? 

Data as a product refers to leveraging data to fulfill organizational objectives. Technology solutions can collect a firm’s IT data, financial data and customer data then utilize artificial intelligence and machine learning to enable business units across the organization to determine and execute goals. For lenders, key goals are enhancing operating models, automating credit decisions and building customer intelligence.

Enhancing Operating Models

I discussed using data as a product to enhance operational efficiency by leveraging data to drive the decision-making process. Firms can uncover valuable insights that are hidden within the layers of processes across disparate systems by leveraging tech solutions such as Dremio to extract,  standardize, store and manage access to the data so it can be utilized across the organization in accordance with regulatory compliance. As a result, firms can reduce operating expenses, capture missed revenue opportunities and identify risks. Additionally firms can further develop digital capabilities by leveraging the insights collected across the organization to supercharge innovation, whether building in house applications or partnering with startups.

Automated Credit Decisioning

Credit decisioning is the process of determining whether or not a customer is eligible for a loan. To make a credit decision, lenders traditionally use data such as demographics, loan data, transactional data and the information from credit bureaus, such as credit history. However, there is a trend towards leveraging alternative data, which is data that is not typically captured as part of the lending process but can give a more accurate picture of the customer.  Alternative data can include call center data, CRM data, bill payment history, social media sentiment and asset ownership. In order to capture this deeper level of information about a customer, tech solutions like Zest AI leverage AI and ML to rollout complex mathematical models which can capture non-linear behavior data. JP Morgan is one of many large banks that are  adopting this strategy of leveraging alternative data for loans. Incorporating both traditional and alternative data during the credit decisioning process leads to expanded customer segments, financial inclusion and less human error. 

Customer Intelligence

Lastly, I discussed leveraging data as a product for customer intelligence, which refers to building detailed profiles of customer preferences and trends, then using that insight to design new products and improve customer experiences. Tech solutions like Perx Technologies offer ongoing real-time data sourcing and leverage AI, ML and data analytics to amplify the insight-building process and create personalized customer experiences. Use cases for data as a product include (1) capturing a single view of the customer (2)  enhancing the customer journey and offering personalization (3) providing optimal customer service and support and (4) expanding the customer lifetime value.

In summary, data as a product has multiple applications, from back office to customer facing use cases. For financial institutions, leveraging data as a product to drive strategic decisions can generate fresh opportunities for value creation and accelerate digital transformation efforts. 

-Kiswana

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