Avoid the Trick of Outdated Decisioning & Treat Your FI to Data-Driven Lending

The materials available in this article are for informational purposes only and not for the purpose of providing legal advice. You should contact your own advisors with questions regarding data analytics in banking. Opinions expressed in this article are of the individual authors and may not reflect the opinions of MeridianLink, Inc.

It's that spooky time of year when darkness creeps in before 6 p.m., and the air is filled with tales of tricks and haunted houses. But there's one area where no one wants to be tricked: lending decisions. So, how can your financial institution keep pace with nimble fintech competitors while steering clear of the nightmares that come with bad credit choices?

Data analytics.

Data is the treat that both lenders and consumers need, especially when it comes to credit strategies, underwriting, and borrower satisfaction. Without it, you might find yourself haunted by hidden risks, missed opportunities, or even outdated processes that slow down your lending operations. However, by leveraging data analytics effectively in your lending operation, you can treat consumers to seamless experiences that not only boost their satisfaction but also enhance their financial health-and the health of your portfolio.

In this blog, we'll unmask the problem with outdated credit decisioning practices, reveal the benefits of using data-driven decisioning models, and explore solutions designed to help you ward off the nightmares of bad credit decisions.

The Trick: Outdated, Manual Credit Decisions

Did you know that 55% of lenders have developed credit decisioning models that never make it to production? That statistic is a real fright. Relying solely on human judgment or sticking to outdated credit strategies, underwriting methods, and risk management processes can expose your financial institution to costly missteps, from unmitigated risk exposure to missed growth opportunities.

For starters, the inefficiencies from this can lead to longer loan turnaround times, causing frustration for both consumers and your team. As a result, your institution may find itself losing business to competitors who can offer faster, more seamless lending experiences. In fact, our consumer survey results reveal that roughly 30% of consumers will switch financial institutions due to slow or fragmented services.

Next, limited data or delays in accessing the insights you need can result in missed opportunities to grow existing relationships or a failure to catch key risk factors, such as shifting market trends or changes in consumer behavior. Without timely, data-driven insights, you risk extending credit to high-risk borrowers, leading to higher delinquency rates and costly defaults. Conversely, you might also miss the chance to offer credit to well-qualified consumers, limiting your ability to foster long-term growth and strengthen valuable relationships. Given that payment challenges and debt management remain top concerns, these are crucial insights your institution can't afford to miss.

Adopting advanced, data-driven credit decisioning helps prevent those costly pitfalls, leading to more reliable lending and stronger portfolio resilience. But where should you begin?

The Treat: Data-Driven Decisioning With MeridianLink Analytics

At MeridianLink^®, we've spent over 25 years lighting the way for financial institutions to optimize their lending operations, and we're here to guide you through the shadows of decisioning challenges with our analytics services.

By leveraging the power of data analytics, data science, and machine learning, we'll help you align your credit strategy with your business goals and risk tolerance. Insights captured from your applications, performance metrics, consumer behavior, and credit history transform into actionable underwriting guidelines, enabling you to simulate credit decisions and collection probability across various scenarios. And as your strategy evolves, our analytics continuously monitor decisioning rates and portfolio performance, equipping you with the data you need to proactively adapt to changing market conditions and consumer behaviors.

The result? An optimized decisioning process that can boost your approval rates, reduce delinquency, and enhance overall borrower satisfaction.

But that's just the beginning! Don't let outdated decisioning practices keep you in the dark. Let's talk about how we can banish your lending fears, uncover new opportunities, and treat your consumers to a better lending experience.

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