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Inteflow User GroupSeptember 2018Commercial in confidence1
Agenda10:45pm - 11:45pm Introduction, Status of Decisioning & EvolutionSpeaker: Vaughan Dixon11:45pm - 12:15pm Whats New!Speaker: Luke Croft- Lunch1:00pm - 2:00pm Industry Update: CCR and Open BankingSpeaker: Steve Brown2:00pm - 2:30pm Strategic Direction and RoadmapSpeaker: Vaughan Dixon- Afternoon Tea 3:00pm - 4:00pm Proposed Developments & New RequestsSpeaker: Luke Croft- Networking Drinks -2
ingYour Hosts kerHeadConsultingCommercial in confidence3
JamesMooreConTerzoglouAndrewBrennanHead ofProductCOOArshadEbrahimHead ofDeliveryHead ofCoreThose back in the office 70 ommercial in confidence4
illion Decisioning UpdateWhat do we see happening in the market?5
The Market is changing at ever faster waysRegulationPaymentMethodsCCRRPA / AI SFintechChurnDigitalHardshipDataSourcesCompliance6
Robotic Process Automation (RPA) ishappeningOne of the biggest growth areas-Automating many tasksReplacing interfacingHigh efficiencyHigh accuracy and complianceRapid to apply and scaleLow riskEmployee engagementCustomer benefit. Robots are able to reply 24x77
RPA will be the major growth area in the nextperiod8
Machine Learning and AI are starting to beadoptedFraud models- identifying those customers that need reviewTransactional fraudUser guidanceRecommendation and guidance is a key area to help theunderwriter- The AI engine will become an Intelligent Assistant foryour staff9
Applying this to your business processAdding an assistant to thedecisioning system will provideprompts and recommendationswhich will guide the underwriterRecommendationApprove this application. The applicant is young and has not cause for not having acredit file. In 96% of the time this application would be approved and only 0.1% fail10
Growth in Payment Providers – opening newmarketsBringing younger customers into the creditprocessVerification of customersThese will potentially increase the level ofdata available at the younger age groupsChallenges with verificationImpact to Models?High VolumeNew DatasetsPayment ProvidersAfterpayOxipayZippayAlipay GlobalAuthorize.netBitPayCashfreeCoinbase CommerceeWAY Rapid 3.1FuturePayG2A PayGoCoinLaybuyPayment Express PxPayPaymentExpressPayPal Express CheckoutPayPal Payflow ProPaystationPOLi Internet BankingPUT IT ON LAY-BUYShopify PaymentsWorldPay (Direct)WorldPay (Offsite)11
Watch out for the technology companiesThese organisations are well placed to exploit their reach- these organisations have the desired channel for young consumers- they are probably as trusted as the banks- they have the size to implement changeNew banks starting inAustraliaTic Toc, Qwid, VoltThe fintechs keep arriving. Not all will succeed but a number of good ideas andchallenges to existing thinking will appear.12
Australian RoyalCommission: Public opiniondriven by the media'Banking CodeCompliance Committeereports that responsiblelending breachesincreased by 76 per cent',The Age, March 2018'CBA pepperedproblemgambler withcredit offers','CBA wasn't honest withASIC, while ANZ at risk ofbreaching responsiblelending laws, royalcommission hears',ABC, March 2018The AustralianFinancial Review,March 2018'We rely on cardealers to verifyour loans, saysWestpac',The AustralianFinancial Review,March 2018‘Are banks irresponsibleabout responsiblelending?’,The Sydney Morning Herald,March 2018‘'Doomed to fail':CBA's 10,000inappropriateloans’,The Sydney MorningHerald, March 2018'Westpac disregardedASIC credit card lendingdirection',The Australian FinancialReview, March 2018
Responses to the royal commissionRC: How do you verify a customer’s declared expenses?ANZ: 'Our processes are we do nothing. There are transactions on those statements thatare inconsistent with the statement of position and we don't do anything.'RC: Why?ANZ: 'We're talking about the manual review of paper-based bank statements and touse those would be highly complex, very time-consuming [and] very costly.'RC: Tell us about the loan serviceability process failure for overdraft applications?CBA: The bank's automated system ‘spat out’ wrong approvals andwas ‘doomed to fail’ because of bad design.RC: Why did you fail to comply with ASIC’s position regarding verification of employmentstatus and income when offering credit card increases?Westpac: ‘Ignoring the regulator is not a good idea.’
Current state of affairsThe banking royal commission consumer finance hearings highlighted the followingissues:Failures to verify income,expenses and liabilitiesInadequate lendingprocessesMortgage broker monitoringInternal control errorsIrresponsible car loansStatistical models are failingGrowing regulatory pressureHigh risk indirect distribution channels
Utilising Bank Statements can assistBank statements offer fast, secure and automated income and expense verification, categorisation andanalysis tools. Frictionless products and services are available in various formats to suit yourrequirements.Income and expenseConsistent categorisation based on your ownpolicy and configuration requirements acrossdirect, online, broker and third-party channelsFraud prevention enabledID verification, fraud prevention and data securityare integral to all of our productsOpen banking readyLeading products will incorporate bank. The outputs andcategorisation will be consistent with an implementationthat can be completed nowFast deploymentProducts and services can beup and running within two days
Regulation will only get harder17
Smarter use of data will be importantCustomers expect;- Their data to follow them- What we know we will use and not ask- External data sources will be used to complete where possible-The process to be frictionless and fastCONSUMERSingleCustomer ViewPopulated fromBank statementsPopulated fromonline profile18
CASESTUDYInternationalBankSmall credit contracts are growingSACC compliments Comprehensive Credit Reporting24 months of International Bankapplications between 1st January2015 – 31st December 2016Unique illionSACC DATA5.4%of applicationshad negativeadverse at illionwith 10.8% going‘bad’ at the bank(5x higher thanaverage)3.0%Unique illionSACC and Late CRData0.4%12%18%LateCR Data1.3%8%Bad RateCCR data and SACC do not necessarily intersect, proving the case that anegative bureau is important for the foreseeable future22
CASESTUDYMutualBankNo one bureau contains all informationA mutual bank undertook a bureau validation to understand its potential risk factors notcaptured under a single bureau strategyTotal Adverse 2.72%Approval Rate by BureauBureau 2Unique 0.86%Bureau 1Unique 0.7%Common1.16%UniqueillionUniqueAdverseBureau 2Bureau 2 has 74.3% of thetotal adverse, comparedwith Bureau 1 at 68%202333%67%AllUniqueEquifax9%Bureau 1AdverseApprove74.3%Cash Now67%50%UniqueBureau291%50%MultibureauDeclineof unseen illion adverse isbeing approved compared tojust 1 in 11 for known adverse1 in 81 in 8 Personal Loan membershave a SACC or MACC enquiry,of which ½ are unique toBureau 2
Customers are moving to SaaS to improveresponsivenessSaaS brings significant benefits to customers:-Quicker time to implement / changeLower costsUpgrades managed by providerGuaranteed service levelsScalability for growthInteflow was built to support SaaS and we see anincrease in the uptake or migration to this approach21
What do we seehappening inAustralia?Applicant Volume as expectedremains high in the major citiesand across the eastern seaboard
Approval RatesAll Segments23
Approval RatesTelco / Utility
Approval RatesTrade
Approval RatesAlternativeFinance26
Approval RatesBanking27
BrisbaneBanking28
SydneyBanking29
MelbourneBanking30
AdelaideBanking31
Approval Rates will vary by industry segmentApproval Rates by Segment87%79%60%B&F57%AltFiTradeTelco/Util32
Looking at what we seehappening in NZApplicant Volume as expected remains high in themajor cities33
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Customers are moving to SaaS to improveresponsivenessApproval Rates by %Approved60%ReferDecline80%100%120%Withdraw35
ApprovalPercentages(by telco/utilities)ApprovalPercentages(by finance)36
ApprovalPercentages(by trade)37
Top 5 reasons effecting customer nAdversePossible MatchAdverseScore ReferIdentificationScore DeclineServiceabilityDLData QualityDuplicateData QualityDLBureau Report AgeCompany AgeTelco / Utility38
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Vaughan DixonChief Technology Officerillion40
Payment Express PxPay PaymentExpress PayPal Express Checkout PayPal Payflow Pro Paystation POLi Internet Banking PUT IT ON LAY-BUY Shopify Payments WorldPay (Direct) WorldPay (Offsite) Bringing younger customers into the credit process. Verification o
