Traditionally, when consumers wanted to originate an account with a financial institution (FI), they would submit their application and wait for days or weeks to find out whether or not they were deemed creditworthy while the FI would analyze any internal data and traditional credit history from the three main bureaus. This posed a few problems: consumers that lacked traditional history but wanted to open an account were at a disadvantage, the FI had an untapped market of consumers (the underbanked population) that was inaccessible, and even when consumers did have traditional files banks could not respond in a timely manner due to inefficient manual processing. Application processing systems address all three of these issues and allow banks more functional and efficient processing.
Consumers that lack traditional credit history, the underbanked, gain an advantage through modern application processing systems. Through these systems, FIs can access a vendor network, which means they have access to many institutions that provide financial data that does not fall into traditional categories. These include phone and utility companies, loan aggregators and payday lenders. Through their information, FIs can accurately determine whether or not an underbanked consumer is a good financial risk. With application processing systems, banks no longer have to assume that all underbanked consumers are risky--these consumers can be offered terms that are directly based on their actual financial performance.
The information pulled from a vendor network allows FIs to make accurate judgment concerning the underbanked, so a new demographic is available for business. Not only are consumers able to be accurately analyzed for creditworthiness, but banks have a new demographic of consumers available. FIs can gain access to a new market of consumers without increasing their level of incurred risk and can start to build relationships with these consumers. Banks that offer personalized services, especially to the underbanked, provide consumers with the confidence that their FI "knows" them and greater trust is built.
Through application processing systems, existing and new customers alike can originate financial products more readily than ever before. This is due in part to alternative credit data, but it is also because of the automation and realtime processing that application processing systems provide. These systems run applications in realtime, meaning that when the consumer submits an application they can receive results in less than a second. As long as stipulations are met, consumers can apply for a product, receive the result, and if approved, start using the account immediately. This process provides value for consumers because of the "instant gratification" aspect and value for FIs because they can process more applications in less time. This is in vast contrast to traditional systems that used manual processing for decisioning and origination and could take days or even weeks to process an application.
Application processing systems provide many benefits for financial institutions as well as consumers. These systems provide access to vendor networks which allow underbanked consumers to be accurately evaluated for creditworthiness, allow banks to have access to this currently underserved market, and expedite the process of account opening for new and existing customers. These systems allow origination to be more effective and efficient while offering benefits to both parties.
By Kelty Wallace
Consumers that lack traditional credit history, the underbanked, gain an advantage through modern application processing systems. Through these systems, FIs can access a vendor network, which means they have access to many institutions that provide financial data that does not fall into traditional categories. These include phone and utility companies, loan aggregators and payday lenders. Through their information, FIs can accurately determine whether or not an underbanked consumer is a good financial risk. With application processing systems, banks no longer have to assume that all underbanked consumers are risky--these consumers can be offered terms that are directly based on their actual financial performance.
The information pulled from a vendor network allows FIs to make accurate judgment concerning the underbanked, so a new demographic is available for business. Not only are consumers able to be accurately analyzed for creditworthiness, but banks have a new demographic of consumers available. FIs can gain access to a new market of consumers without increasing their level of incurred risk and can start to build relationships with these consumers. Banks that offer personalized services, especially to the underbanked, provide consumers with the confidence that their FI "knows" them and greater trust is built.
Through application processing systems, existing and new customers alike can originate financial products more readily than ever before. This is due in part to alternative credit data, but it is also because of the automation and realtime processing that application processing systems provide. These systems run applications in realtime, meaning that when the consumer submits an application they can receive results in less than a second. As long as stipulations are met, consumers can apply for a product, receive the result, and if approved, start using the account immediately. This process provides value for consumers because of the "instant gratification" aspect and value for FIs because they can process more applications in less time. This is in vast contrast to traditional systems that used manual processing for decisioning and origination and could take days or even weeks to process an application.
Application processing systems provide many benefits for financial institutions as well as consumers. These systems provide access to vendor networks which allow underbanked consumers to be accurately evaluated for creditworthiness, allow banks to have access to this currently underserved market, and expedite the process of account opening for new and existing customers. These systems allow origination to be more effective and efficient while offering benefits to both parties.
By Kelty Wallace
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