Friday, June 9, 2023

Technology and divestment: how to lend in the face of adversity

Economic conditions are forcing credit fintechs to refine their risk engines to maintain portfolio health, an objective that requires the use of technology

The use of technology for data analysis is essential to identify areas that are riskiest for credit delivery and is an essential task for fintechs dedicated to lending in the current economic context.

capital dry, Rising benchmark rates and rapidly rising inflation are putting pressure on digital lenders, who must use technology to identify good payers so as to avoid a rise in delinquency rates.

Spokespersons from fintech Finactiva and technology companies Nubit Consulting and Provenir agreed at the virtual event Lending in LatAm: How to maintain a healthy portfolio in times of crisisorganized by iupana,

“Divide down the overall action strategy to figure out in which sectors, in which industries, at which development stages it is necessary to adjust financing engines, business rules, scoring in a more restrictive way; And in what other areas do we need to loosen up a bit, said Pablo Santos, founder and CEO of Finactiva, a Colombian credit company for SMEs.

The executive stressed that economic conditions do not affect everyone equally, so it is necessary to target sectors that can adapt more quickly to economic cycles.

“You have to understand in depth which economic sectors are affected, which are neutral and which are winning at this juncture,” he added.

Onboarding and data for a healthy portfolio

Leveraging technology allows for good data collection, organization and analysis, which must be implemented immediately to maintain a healthy portfolio. It starts with a process of contacting the customer, asking the right questions, and adding friction.

“You have to lend well and lending well begins with the process of enlightenment Very suitable. and, without a doubt, a very mature scoring process”, said Jorge Ospina, CEO of NubIT Consulting, a technology transformation company. He added, “The real-time technology also helps us make a good decision so that The customer should not be made more indebted.

On the credit score side, the use of alternative data helps to gain more information about applicants and adequately profile lines of credit. There is an evolution in this: the traditional thing was to consult credit bureaus, but now analyzing these expands access to information.

“Today we have a huge variety of data that is out there and when you have cloud-native technologies it is very easy to be able to recharge from this variety of data,” said Jose Vargas, executive vice president of LATAM at Provenir, a Fintech Company.

“We may call them optional data, but they are additional data that you would not normally find in a risk center or you want to reduce friction when requesting information in a credit application,” he concluded.

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