Two weeks ago, Loxon colleagues shared their thoughts with industry leaders in London at the MoneyLIVE Summit, a global payment and banking conference attended by over 1000.
The numerous topics covered at the summit included some very relevant discussions on open banking ecosystems, the changing lending and economic landscape and payment innovations, to give just a few examples.
How do personalized affordability models improve lending strategies?
Loxon’s CEO, Tamas Erni was one of the panel members in a discussion relating to lending strategies during a period of economic upheaval. The panelists revealed that banking activity is almost back to normal, with the notable exception of mortgage-related activities, which have dropped by about 30-40%.
They also highlighted the importance of more focused underwriting and adopting more personalized affordability models. It is not enough to go with standard score numbers anymore. Incorporating much more personalized, individual behavioral data is crucial for prudent lending and banking.
How can AI algorithms and open banking data provide personalized treatments for clients?
Tamás Erni pointed out that in this new environment Loxon is also experiencing a renaissance of EWS and collection systems. “Since the past 10 years were about constant growth, now is the time to try out the machine learning and other scoring models we have built in real life and to start to provide much better personalized treatment for clients. This is true not only during the lending phase, but also during the collection phase. By using AI algorithms and additional information available via open banking, modern collection systems can recommend personalized treatments for clients who fall behind in payments”.
It was mentioned that financial education also plays a vital role. Better educated clients can behave more responsibly when making financing decisions and could also be more open to collaboration in cases where they become delinquent with their payments. Such education can also be provided via the modern mobile platforms of the bank.
How can clients’ behavior data improve the credit process in the future of open banking and open ecosystems?
During the conference multiple sessions covered the future of open banking and more open ecosystems, where clients’ behavior data could be used to improve the credit process. Affordability models could be based on the actual behavior of the client, thereby significantly improving the historical credit score-based models.
One of the currently trending online payment methods is BNPL (buy now, pay later), which allows the customer to postpone a payment or divide it into future instalments without interest fees.
However, the big question is how the collection of late payments will be handled and what role Loxon Collection System can play in this area. Loxon is also very active in teaming up with service providers so as to be able to offer better, personalized solutions in the event of financial difficulties. Loxon’s self-service solution can offer personalized payment agreements for delinquent clients, as well as flexible payment methods.
All in all, reflecting on the experience, our team had an incredibly enjoyable time at the event and found it to be quite interesting. We were thrilled to have the opportunity to attend and engage with the various discussions, meetings and other possibilities that the event offered.
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