Traditionally income and expense verification has been time intensive, manual and, as a result, subject to human error and bias. As part of the credit application process, customers have provided physical or emailed PDF copies of their banking statements to lenders or brokers and, along with their teams, they have then sat and reviewed the spending, line by line, to categorise and make personal assessments on position and risks.
This process is burdensome and time-consuming for both parties. This keeps overheads and effort high, and often sees consumers drop out of the application process. With regulatory reviews and serviceability pressures driving customer acquisition costs up, the importance of minimising processing costs and application drop off rates is more critical than ever.
Tools that automate this process are now eliminating some of these issues and creating new opportunities.
Banks already know everything about their customers’ income and expenses. For existing customers applying for new products, a huge opportunity exists to pre-populate applications, rather than requiring them to supply all supporting documentation.
For new customers, using new frictionless online technologies that instantly review and categorise their income and expense data for quicker decisions means significantly lower dropout rates, manual processing times, back office costs and human errors. For Banks and Mutuals, these technologies mean faster, smarter credit decisions, which translates into higher volume and an improved customer experience.
Putting the right automation tool in place presents a huge range of benefits.
- Reduction in acquisition costs due to increased conversion rates and decreased processing costs
- Reduction in back office time and dollar costs
- Reduction in human error
- Reduction in human bias
- Higher conversion rates, as customers are not directed back to their transactional bank and other offers
- Higher cross-sell rates, as easy, accurate and reliable categorisation of expenses leads to the rapid identification of well-matched products across other segments, such as loans, credit cards, and insurances
- Reduction in fraudulent applications, as doctored bank statements can’t be used in automated systems
In the past, security and protocol risks have been at the core of fears around automating this process.
There have been concerns around data security and potential breaches of the Internet banking codes and policies of the consumers’ transactional banks. However, as the automation of these processes has grown, many Banks and Mutuals have been running dual processes for receiving and categorising this information to make all applicants comfortable: an automated process and a manual one. Rather than overcoming concerns around security and protocol adherence, this leads to increasingly difficult back office processes and ultimately results in inconsistency in decision making.
To add to these difficulties, available automation products have, up until recently, required large, time intensive and costly projects to customise, get live and integrate.
Considering partnering with a provider?
Find out how Beyond Bank Australia and Community First Credit Union used frictionless automated bank data retrieval to help improve their customers’ onboarding process, reduce fraud, and enhance credit decisioning.