Millions of consumers are caught in or at risk of falling into high-cost credit traps. As credit scores reduce, borrowers become forced into lengthy cycles of financial recovery and ‘High Interest Credit’ for prolonged periods. With the current cost of living crisis and rising inflation and interest rates, greater numbers of consumers are being driven towards short-term, higher-interest and revolving credit.
Traditionally, banks and lenders have been limited in their ability to support customers to be better able to manage repayments and work towards reducing debt faster. With the new Consumer Duty Act coming into effect in July 2023, added responsibility has been placed on providers of credit to act to deliver good outcomes for retail customers.
Applying the Finexos range of solutions helps banks and lenders better assess the capability of consumers, reduce the cost of borrowing, and enables them to help consumers safely restructure high-cost credit into more affordable and sustainable credit.
Using the Finexos Financial Capability Scoring (FCS®) model and FIOLA® risk engine, credit providers utilise this unique proprietary model and new SaaS-based risk platform, tailored specifically to their lending business, to measures how well a borrower manages their money on a monthly basis.
The unique cash flow-based credit-decisioning engine uses real-time data obtained through Open Banking and Finance to build a more accurate picture of borrowers’ financial capabilities, enabling more informed decision-making for lenders and access to better credit rates for consumers. This highly accurate system provides real-time affordability and vulnerability analysis, with early detection and warning to help enable consumer understanding and support, a crucial part of meeting the new Consumer Duty obligations.
The FIOLA risk engine and the A2i machine learning algorithm make it possible to determine likely individual credit performance without the need for a traditional credit score when not available. This has been proven to be more accurate than using traditional credit scoring methods alone.
With this advanced technology, the FCS® model and Open Banking data, enhanced insights into the needs, characteristics and objectives of consumers are unlocked. Banks and lenders can better and faster detect, quantify and qualify customers and are helped to deliver good consumer credit outcomes and understand and evidence if they are being achieved.