You’ve reached the final — and arguably most important — chapter in the mini-series. Here we introduce you to first-party data.
When it comes to credit, we’ve shown you that many, many miss out. We’ve also explored how lenders have a clear responsibility to serve their customers proactively, offering them the right credit to match their individual circumstances.
But how?
To do this, lenders must look to the validity of alternative data sources to help. Gathered not from the bureau, or from social media, but from the individual. The best data, we believe, rests with the consumer themselves.
And first-party data — that is, data gathered directly from the consumer — is both unique and powerful. It offers lenders the most relevant, dynamic financial data on their customers today, unavailable anywhere else. It unlocks financial attitudes and beliefs as well as the very earliest indicators of financial distress or hardship.
From sudden redundancy to an increase in hours due to a thriving business, first-party data provides us with the individual set of circumstances that contribute to an overall picture of an individual’s financial health.
This additional, rich data source provides a complementary level of insight to lenders, offering them, for the first time, a truly holistic view of the most current financial situation of their customers ever available.
And why does it matter?
It matters because, without it, the traditional data sources used by lenders contain historic — and often incomplete or outdated — credit information.
And the impact is startling. For those of us with limited credit histories, the opportunity to access mainstream financial products becomes increasingly difficult, with figures suggesting 5.8 million thin-file UK consumers are effectively invisible to UK lenders, with no or very little credit history available to them. Stateside, approximately 45 million consumers were classed as ‘credit invisible’ or ‘unscorable’ by the major US credit bureau in 2018 — a figure roughly equivalent to 11 percent of the US population.
More dangerous however for consumers and lenders alike, is the inability of traditional bureau data to spot sudden financial change. The seismic impact of Covid-19 across the globe is causing banks to tighten lending standards as they look for new ways to score credit applicants. Data delays caused by traditional credit bureau data which were once frustrating are now critical, as lenders grapple to keep pace with the dynamic nature of an individual’s most current financial health.
So how can I benefit?
For the power of first-party data to be unlocked for consumers, a frictionless consumer experience must be integrated into a lender’s existing credit decisioning processes.
Replicating a face-to-face conversation with the lender, Aire’s technology is delivered into the hands of the consumer by SMS or email, providing the individual with a highly relevant, personalised experience — continually optimised by Aire through our approach to consumer research.
Assessing financial character (such as financial maturity, savings and credit attitudes) as well as financial stability, capacity and partner income, Aire delivers to lenders a truly holistic set of insights to better reflect the individual picture of each consumer — seamlessly and at scale.
Data to actionable insight
Behind the scenes, Aire’s algorithms get to work immediately, turning the newly gathered first-party data into tangible insight. Our award-winning approach to data and analytics, developed over six years of research and testing, uses behavioral, client and our own context data to validate consumer responses, in real-time.
Returning key indicators of risk of financial difficulty as well as most current affordability and a measure of engagement, insights are delivered back to the lender to inform lending decisions, overlaying the existing information they hold on their customers through existing bureau data with the most dynamic, powerful data available to them — direct from the consumer themselves.
Find out how we’re helping: introducing Pulse from Aire, credit insight in a heartbeat.
This series from Aire was taken from our complete guide to first-party data. To find out more, download your copy via our website.
