Big banks are flush with data and analytic resources. Optimizing
their credit risk models is a seamless, efficient process.
It’s not as simple for everyone else: Small banks, Credit
unions, Subprime and alternative finance (alt-fi) lenders. These
types of financial businesses can lack the expertise and data to
quickly validate, refresh and test their models. Integrating with an
advanced data and analytic platform is often cost-prohibitive, and
too cumbersome for limited staff resources to manage.
Knowing this, GDS Link recently integrated to the Equifax
Ignite platform to help solve this issue. Now, smaller companies
have an opportunity to engage the GDS Link team to leverage the same
Equifax data and analytics as their larger counterparts.
Overcoming barriers to progress.
It’s one thing to build a credit risk model. All financial
lenders do it, but continually validating those models is often
overlooked and the models are left to run until a major event
occurs. Yet, it's essential to monitor ongoing model performance
because market conditions change. Consumer behaviors shift. These
can cause models to “drift”; becoming less predictive over time,
potentially leading to impacted profits and loss. This is when
models can do more harm than good to both lenders, consumers, and
the businesses they serve.
The process of a model validation helps determine if it is
still serving its intended purpose. To do this, businesses need
access to more of the appropriate data. This includes information on
consumer financial behaviors, payment performance, prior defaults,
and more. The problem is that it can be difficult for smaller
organizations to access this type of data and analytics at scale.
Barriers to access can include:
- Time. In smaller shops,
employees often wear multiple hats. They lack the time and
expertise to focus on a detailed process like model
- Technology. Many
smaller businesses are unable to integrate with APIs and
Data scientists and analysts are common at big banks, but not in
smaller firms. As we have seen, many organizations lack
sophisticated teams dedicated to scorecard performance and
re-tuning models as needed
Data and time are expensive. Model validations and monitoring
are often overlooked because they’re viewed as costly and only
completed as a result of an event or on an annual basis.
As a result, comprehensive data and analytics have been
deprioritized by smaller firms, leaving them exposed to risk of credit
loss, compliance and regulatory changes, and reputation risk. But all
that is changing.
Growing our customer partnerships through solution integrations
The GDS Link integration with Equifax Ignite® simplifies
everything for its clients. Equifax Ignite is a cloud-based data and
By leveraging Equifax
Ignite®, the GDS Link Analytics and Advisory team gains access to
powerful analytics tools, a secure sandbox environment for
experimentation, a learning loop that aids in optimization, and
multisource Equifax and third-party data. This includes new,
differentiated data sets that GDS Link can use to help financial
institutions better understand consumers from every angle, such as:
- Traditional credit data
spanning credit accounts, public records, collections, and
- Non-traditional data such as
account payment data for cable, utility and cell phone
bills. This type of alternative data is not normally
typically included in a traditional credit report, yet it
can be highly predictive of future payment performance.
- Open banking data which is known to
increase model performance by introducing numerous
affordability metrics such as cash flow insights, NSF
trends, and repeating borrowing patterns.
Wealth and lifestyle insights on employment,
income, wealth, consumer preferences and more.
“More unique, alternative data can provide more detail about
consumer transactions and financial behavior,” says Carl Spilker, EVP
of Analytics and Advisory at GDS Link. “Access to rich credit history,
augmented with alternative data is the type of detailed information
our customers need to quickly discover emerging risk and opportunity.”
Ignite®, GDS Link’s Analytics and Advisory team can work within a
single streamlined environment. Not a disjointed network of data
sources, scoring systems, reporting facilities, and involving multiple
departments. Mass amounts of data can be managed and executed better
with cloud-based, scalable computing capacity offered in Equifax Ignite.
Everything is done faster and more efficiently without the
need for new technology or adding expert staff.
Building new models in 30 days? You bet.
Here’s another game-changer. The Equifax-GDS Link
integration allows GDS Link to build and deploy high-performing new
models in record time. Days and weeks, not months.
In some cases, companies can go from “analytics to
production” in roughly 30 days. That's because the Equifax Ignite
analytics environment and GDS Modellica Analytics platform are
purposely built to support rapid deployment.
Likewise, it helps companies tailor models to their niche
customer base and population segments. For example, repeatable
analytics and scores can be leveraged to determine the expected
impact of delinquency rates, predict market sizing, project profit
and loss, and more.
“Equifax Ignite is a great go-to resource when we need to
answer our customers’ problems,” says Spilker. “It puts everything
within a single, secure, cloud-based environment that practically
gives us unlimited space to work in. Most importantly, it removes
typical bottlenecks and delays in the model development process so
our customers can get to the business decisions they need faster.”
Looking ahead, Equifax is committed to innovation through
partnerships like this one. Especially when it helps improve financial
inclusivity for all consumers and businesses.
To learn more about this solution and additional partnership
opportunities, contact email@example.com.