Risk analytics and decisioning

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Saying Yes More: How GM Financial, YapStone, and Insikt use Risk Analytics and Decisioning to Drive Business Growth

To the outside world, loan decisions and payment approvals can seem like a simple yes or no decision: either the application is approved or it’s declined. However, the most successful financial services organizations know that determining a yes, no, or even maybe response requires a robust decisioning process that not only protects all parties, but also drives an organization towards its goals.

In today’s tech savvy world risk decisioning has become an artform that has the power to make or break a financial services organization in a number of ways, from its impact on user experience, to the risks it exposes the business to or protects it from. Businesses who embrace this new risk management artform are developing sophisticated risk decisioning processes that incorporate more than the traditional credit scores we all love to hate.

It’s no secret that digitization has created huge disruption within the financial services industry, replacing traditionally paper-based processes with tech-powered automated systems that make it possible to process loan applications and make payments instantly. But this ‘instant gratification’ culture has also created new opportunities for fraud and increased threats that have the potential to outsmart traditional risk decisioning processes that don’t keep up with the evolving risk landscape.

So how can businesses use risk decisioning not just as a form of protection but also as an opportunity to innovate and grow? GM Financial, Yapstone, and Insikt are three examples or organizations that are using strategic tech partnerships to create sophisticated risk decisioning processes that secure their positions as industry leaders.

GM Financial’s Loans in the Fast Lane—Driving the Consumer Experience with Rapid Decisioning

With a range of loan and lease products for prime, near-prime, and sub-prime applicants, risk-decisioning technology plays an integral part in creating a best-in-class application process that helps GM Financial power rapid loan decisioning and grow its customer base.

“Our goal is creating customers for life.” says Mike Urrutia, senior vice president of dealer services/operations support at GM Financial and AmeriCredit, GM’s non-prime lending arm for non-GM dealers. “Over the past year we’ve worked on innovation and added technical solutions to create remarkable experiences for all of our customers.”

Urrutia credits GM Financial’s success to a combination of first-class technology and a culture of continuous improvement. “We’re on our 9th generation of custom score cards. As we leverage new alternative data sources and incorporate this information into our scorecards and our models, we are able to make better decisions, faster.”

Car shoppers expect speed in everything, even car loan or lease applications. “It’s our job as a company to react to consumer demands and provide that next level of service for our customers.”

To meet consumer and dealer expectations, GM Financial uses a decisioning platform and scoring model to integrate data points and quickly decision applications. “With access to more information, we become faster and can automate decisions that would otherwise be manual. Speed helps drive a better customer experience and makes it easier to do business with GM Financial.”

“Our overarching goal is to support GM sales while achieving appropriate risk adjusted returns,” Urrutia says. “We are continuing to make better decisions by leveraging data and deploying innovative technological solutions.”

YapStone Powers Secure Payments: Mitigating Risk to Drive Business Growth

“We assume the liability for each rental transaction for our clients,” says Mike Gramz, executive vice president and chief risk officer at YapStone, a payments-as-a-service (PaaS) solution provider with deep experience in the travel-rentals market. YapStone facilitates payments on travel sites such as HomeAway and Kigo. “Customers want fast transactions, but fraud is also happening quickly,” Gramz says “Our clients need to feel secure as they’re not just selling products to people they’ll never meet, they’re inviting complete strangers to rent their home.”

To meet these timing expectations and maintain a high level of security, YapStone has adopted sophisticated risk decisioning processes and is transforming its risk management operation from a reactive to a predictive analytics group. “We use Provenir’s cloud-based risk decisioning platform, it lets us own the entire risk process. Its no-code visual tools let us design and configure our business process and go live quickly.”

In addition to mitigating risk, Provenir’s data analytics foster new business opportunities, “we’ve gone from using data to manage losses to having it generate more revenue.” Says Gramz.

YapStone’s impressive speed is one driving factor behind business growth and profitability: their risk decision engine can confirm an applicant’s identity and auto-approve sub-merchants in a matter of seconds, prompting the business to scale to new heights from its recent annual stat of $20 billion per year in electronic transactions.

Their service, with its flexible and robust risk decisioning, is also designed to be used in all marketplace types, allowing YapStone to diversify its portfolio and continue to expand its business in the future.

Insikt’s Rapid Loans for Non-Prime Consumers: Smarter Decisioning Lets You Say Yes More Often

According to Consumer Financial Protection Bureau (CFPB) statistics, 26 million U.S. consumers are credit invisible.* “These are clients who have no data, not bad data,” says Louis Mrachek, vice president of risk at Insikt, a CDFI-certified (Community Development Financial Institution) lender. Targeting these potential borrowers, who are often ignored by traditional financial institutions, the firm provides credit-building loans through its white-label platform, Lendify. The service is available to retail venues such as credit unions, banks, check-cashing businesses, and money-transfer providers.

“In the money transfer business, customers expect a quick transaction. To meet this demand, we’ve created a more flexible and accessible, multi-channel loan application experience,” Mrachek says. The applicant can start a Lendify application at an in-store kiosk with a tablet and opt to complete it later on their phone.

With many applicants having little to no credit history, “income verification is very important,” Mrachek says. “To help manage that, we’re investing heavily in data analytics and systems to analyze other data types.” Taking a similar approach as Yapstone, Insikt also prefers to maintain direct control over credit decisioning by not handing off requirements to an engineering or IT team.

Insikt chose Provenir to facilitate its data analytics. “With the Provenir Platform we are able to do real-time modifications to the rule set and conduct A/B testing on elements throughout the decisioning process. This enables us to quickly incorporate test learnings back into our risk strategy.”

This control over the entire risk decisioning process will allow Insikt to make strategic updates to credit models and data integrations, empowering them to make smarter decisions and say yes to more applications without increasing risk. Mrachek sees increased technology investments down the road for Insikt, including artificial intelligence tools and machine learning systems for making better business decisions even faster.