Traditional banks have left a huge gap for fintech innovation. But innovations in data aggregation have actually transformed the landscape for everyone. Our latest VB Live event uncovers the secret to leveraging the opportunities data is unlocking for both sides of the field.
When it comes to the latest innovations in lending technology decisioning, says Spencer Robinson, head of strategy at online small business lender Kabbage, “It’s the capability of scale. You’re at a point where making very granular decisions and making very granular segmentations is not costing more money.”
Manually intensive credit decisions are driven by ROI, Robinson explains. But with data automation, it doesn’t cost the computer anything to go to the granular level that can uncover a credible pool of customers who have been hidden by earlier and more limited means of assessment: the entrepreneur who had to trash their personal credit to keep driving growth, or the cash-poor owner who just needs a boost until the busy season.
With transactional data automation for lending, you can decision a hundred accounts or one account—the computer knows no difference. “I don’t have to cut with broad strokes in terms of the credit box,” he says. “I don’t have to cut off everybody because of X, some certain element that I see. I’m able to say, well, 90 percent of people with X may look bad, but I can allow the computer to actually find the ten percent of people that actually end up good.”
In a break from the more common industry-disruption model of financial technology innovation, Kabbage has partnered with financial institutions (FIs) around the world to bring this technology, the Kabbage Platform, to traditional bank customers.
“It would be very easy for Kabbage to sit there and say, we’re going to displace the traditional financial institution in lending to small businesses,” Robinson says. “We think the capabilities that we have augment their capabilities, and we think the access to information and access to customers—that’s something that traditional financial institutions augment our capabilities with. We find it to be a very symbiotic relationship.”
Kabbage isn’t interested in trying to entice a customer away from their bank or loan institution when they’re already comfortable, entrenched, and unlikely to be won over without a lot of effort. Instead, Robinson says, we’re bringing in more granular understanding of that customer’s business to the institution they’re already comfortable with.
“You can really start to drive up the loyalty of that customer with that FI and really expand the product offerings and opportunity offerings that institution is able undertake with the individual small business,” says Robinson. “It really becomes a win-win-win: a win for the customer, a win for Kabbage and a win for the FI.”
And that’s where the future of the financial industry is going, Robinson says.
“What we’re heading back to,” he says, “is rather than you the customer being some point on a spreadsheet to the bank and the bank being a big black box to you the customer, I think we’re going to get back to the point where that relationship between you and your bank becomes a lot more two-way rather than one-way.”
Banks will actually be able to understand customers, predict their needs, and personalize their services, rather than trying to slot customers into pre-determined service offerings.
“The major winner here in the end is going to be the end customer,” Robinson adds, whether it be a small business or it be a consumer. “No matter what segment you’re targeting, having the capabilities to access this more granular information on a continuous basis is going to allow for deeper customization and more options for leveraging data to accurately evaluate credit risk.”
Join industry leaders as they break down the ways data optimization and automation is driving major growth and opportunities for players of all sizes in this free VB Live event.
Don’t miss out!
In this VB Live event you’ll:
- Get insight into the trends and opportunities driving change in the lending and credit risk management industries
- Explore more accurate predictive ratings models based on alternative data sets
- Discover the future of commercial retail lending and credit risk management
- Learn how to improve credit decisions, collections, and portfolio management using new technologies and data analytics
Speakers:
- Spencer Robinson, Head of Strategy, Kabbage
- Sherif Hassan, Founding CEO, Herio Capital
- Saurabh Sharma, Founder and CEO, Indus Insights
- Terry McKeown, Practice Manager, Credit Analytics, Envestnet | Yodlee
- Evan Schuman, Moderator, VentureBeat
This VB Live event is sponsored by Envestnet | Yodlee.