The value of investing in big data is being increasingly acknowledged across organizations of all sizes. This includes lending institutions that have been looking for ways to maintain and grow their margins in a highly competitive marketplace. Big data makes immediate sense for organizations as it is very sensitive to customers’ perceptions. For lending businesses, this means more clarity about developing their products or services.

Big Data & Customer Service

Perhaps the most notable contribution of big data lies in improving the customer services. It should be understood that the utility of customer data was never questioned. However, the resources employed for collating, indexing, and sharing this data were rather restricted. With the increasing awareness about the effectiveness of big data, lending institutions are ready to look deeper into their database. Archives of previously collected data too are being further segregated and simplified to ease decision making. This makes it easier to understand a borrower’s preferences and various parameters that affect the end decision. For home loans, lenders can use this data to communicate better with their customers. This includes providing guidance about taxation, reminders about important bills, and keeping customers informed about their home loan management.

Big Data isn’t Just Volumes

Merely collecting reams of data doesn’t mean that you are a big data user. It is the manner in which data is used that decides whether you are efficiently using big data or not. The emphasis shouldn’t be on quantity. It is important to collect data beyond the primary/core business processes and use progressive analytics to break down complex data into simpler, actionable sets. Once the data becomes actionable, it contributes directly to the organization’s growth. This can mean launching entirely new products or services to better serve the customers. When handled with greater precision and dedication, this can also contribute towards exploring new business channels.

More about Big Data & Lending Institutions

By incorporating comprehensive data aggregation, lending institutes can understand the borrowing psychology more comprehensively. It also helps to identify potentially risky customers. When put into motion, these tools help to decode customer types that have a higher probability to bring profits. As lending institutions look for opportunities to engage new customers, the importance of credit data has also risen. Some analysts opine that this shift towards detailed customer profiling is the result of the recession. However, this is also relevant for financial institutions that might not have been hit by the slowdown. For risk management personnel, a rule based management framework that is customizable and scalable is perhaps the most relevant solution.

Micro-Lenders up the Big Data Ante

Robust risk management driven by big data is finding increasing patronage in the micro lending sector. Here lenders have improved their approval rates and garnered more profits as they continue to cultivate and secure more customer data. With a stronger risk management framework, these businesses continue to see approval rates climb. Their customer segment is not likely to diminish any time soon since the under-banked regional populations continue to thrive. This includes alternative lenders that offer financing against account receivables and merchant advances.

 

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