Disrupt or be disrupted

New research from global information services company Experian has revealed that although 70% of Australian and New Zealand businesses view Open Data as a force for good for both industry and consumers alike, an overwhelming 72% say it’s creating challenges for them as they rethink their processes and relationships with their customers.

In fact, the research identified an increased sense of urgency to overhaul businesses’ originations processes – the way they approve credit and other loan applications, with the imminent Open Banking regime accelerating the need to transform across the customer lifecycle. Two thirds (67%) of Australian and New Zealand businesses admit the need to make significant improvements to their originations performance in the next 12 months to protect customer retention and revenue.

Experian’s Optimising Originations report surveyed key decision makers with responsibility for, or input into, consumer credit risk analysis in Australia and New Zealand across financial services, telecommunications and utilities.

Nearly half (46%) of business decision makers would expect a revenue up lift of up to 10% in the next two years if they invested more into originations performance, including necessary tools, analytics and skills, the report discovered.

Yet most businesses are constrained by the challenges they face within their credit application procedures, with the key pain points including:

• The increasing volume of applications (89%)
• The need for tailored approaches to credit risk analysis depending on the financial product (90%)
• The lack of efficiency in credit risk analysis (87%)
• The increasing or evolving fraud and security risks (85%)
• Keeping up with the latest credit risk analysis methods / dynamic credit risk ecosystem (84%).

Poli Konstantinidis, Experian’s Executive General Manager of Credit Services & Decision Analytics A/NZ, emphasises the importance of business capability to transform traditional credit processes:

“Comprehensive Credit Reporting (CCR) and Open Data provides organisations with an opportunity to enhance customer experience and improve operational efficiency. This is most pronounced at the point of origination, reinforcing the need to invest in agile and adaptable capabilities to process, govern decision and ingest data.

“As Open Banking gains full momentum, customer expectations will continue to grow, expecting faster approvals and more value. If businesses are unable to keep up with the changing landscape and transform their credit processes, it’s likely they will see their competitors surpass them.” Mr Konstantinidis continued.

Readiness for Open Data varies across industries, but only 11% of businesses say they have a business plan agreed and funding allocated, while only a quarter (25%) are actively discussing preparations within the business and with external partners.

“Ultimately, businesses must challenge their traditional credit processes and become proactive in addressing the identified pain points, as nimbler competitors readily embrace technology and data to enhance the whole customer lifecycle and retain customer loyalty,” Mr Konstantinidis concluded.

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