3 Simple Ways to Boost Account Opening with Alternative Data

Highlights: 

• Alternative data provides a comprehensive view of consumers' financial health, enabling businesses to better understand all customers, including the credit unscorable, and make more informed lending decisions.

• By leveraging alternative data, businesses can expand their pool of prospective customers, approve more applicants, offer stronger products, and uncover hidden risks, leading to smarter growth and stronger customer relationships.

Competition for new lending customers is fierce. And you especially need to bring your “A game” when it comes to account opening. Having the ability to tailor these pivotal decisions and experiences to individual borrowers can differentiate your organization and strike the right tone for long-term partnership and financial growth.  

That’s where alternative data comes in. By providing a more comprehensive understanding of a consumer’s financial health beyond traditional measures of creditworthiness, alternative data enables lenders to deliver exceptional account opening experiences. 

Better Understand All Customers

Improving how you serve new customers at account opening starts with how you see them. While traditional credit scores have long been the foundation of financial insight, they can only tell us so much, especially when millions of U.S. consumers lack traditional credit.

But what if you could know more? What if, in addition to how consumers pay financial obligations like credit cards and mortgages, you could see how they pay “everyday bills” that aren’t typically reported to credit bureaus? 

This is the mighty advantage of alternative data. It harnesses the predictive power of account payment data for rental housing, utilities, cell phones, security systems, pay TV services, short-term payday loans, and more to help expand your view of consumer creditworthiness beyond standard credit data. Beyond what your competitors are seeing. 

And since nearly all U.S. consumers have one or more of these basic services—91 percent have at least one utility bill in their name, and 98 percent own a cell phone—it provides comprehensive coverage of just about everyone, including those with and without established credit. 

Improve Customer Decisions and Experiences 

From a decisioning standpoint, alternative data includes Fair Credit Reporting Act compliant information that can help score up to 32 percent of previously unscorable consumers.

Yet, apart from improved scoring and approvals, alternative data also supports better overall experiences. For individuals with established credit, it could enable you to extend stronger offers or even upsell or cross-sell them relevant products that align with their life stage. 

For those with thin credit or no credit, alternative data is a game-changer. By helping you to confidently score more of these customers, it helps them unlock access to a wider range of financial services.

Expand Your Pool of Prospective Customers

Alternative data can help you identify and target prospects that you and your competitors might otherwise overlook due to their credit score.   

Here are some examples:

• Leveraging a mix of alternative data, such as rental payments, utilities, telecom, and specialty finance, with Equifax explainable AI (xAI) technology could boost the number of super-prime and prime consumers by approximately 8 percent, or around 13.6 million consumers.    

• Using utility and telco data alone, an additional 6.5 million people could become scorable.

Imagine the exciting opportunities and potential new account growth if you could capture even a small percentage of this audience. 

With alternative data, you can. And that’s just the beginning of what’s possible. 

In today’s competitive lending landscape, standing out starts at account opening. Alternative data provides a powerful edge, enabling you to better understand your customers, expand your reach, and make more informed decisions. Whether it’s approving more applicants, offering stronger products, or uncovering hidden risks, alternative data opens the door to smarter growth and stronger customer relationships. 

Want to learn more about alternative data? Read our blog breaking down what you should know. 

For more information on how alternative data can help your business, check out the latest alternative data resources.