PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

What the Equifax and FICO Partnership Means for the Future of Finance

Martin Kurpiel by Martin Kurpiel
June 12, 2019
in Credit, Industry Opinions
0
What the Equifax and FICO Partnership Means for the Future of Finance

What the Equifax and FICO Partnership Means for the Future of Finance

13
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Credit giants Equifax and FICO have joined forces in a move that has both companies getting into the alternative data market.

The two companies announced in late March they would be pooling their collective consumer financial data sets to offer the Data Decisions Cloud, a data and analytics tool that can help banks make smarter lending decisions. According to the announcement from the two companies, the product allows users access to data collected from non-traditional sources, like whether an applicant has been able to meet other financial obligations.

While it’s unclear exactly how much combined data the two companies have within their cloud product, it’s safe to say that the market and demand for alternative data sources is unlikely to shrink. Reports also indicate that traditional credit score competitors TransUnion and Experian have made plays of their own to get into the alternative data game. But what does more data being available to banks actually mean for the consumer, and what should we expect in the future as this trend continues?

  • There is big potential for innovation: If banks and other financial institutions have more data to make decisions on lending, they have more opportunity to customize offerings. Think of the credit applications you currently receive in the mail. These offers may be far more customized — and even much more relevant — as a result of banks having access to more information.
  • Ethics and privacy concerns will be raised: Privacy is a particularly touchy subject right now. With Mark Zuckerburg recently declaring an era of privacy at Facebook, and a seemingly unending list of data breaches that make headlines, it is to be expected that the FICO/Equifax partnership will be met with skepticism. It will be interesting to see how the companies respond — while the way credit scores are calculated are relatively well known, adding more data means the reasoning behind decisions might get murky.
  • Decisions could be faster: Consumers are already used to quick lending decisions in some aspects of their lives. Store credit card decisions are typically made in seconds, and even big ticket purchases like vehicles have seen decision times improve. However, for larger transactions, like home and business loans, there remains significant red tape. If banks have access to more information about who they are lending to, there is potential to speed up the decision process and get money to consumers faster — a win win.
  • Scores may not be so static: Anyone who has tried to improve their credit score knows it can be a lengthy process. But with new ways to determine a consumer’s trustworthiness and credit history, this could change. More data could enable a more real-time view into a consumer’s spending and financial history, meaning it could be easier for consumers to recover after financial setbacks.

It remains to be seen what banks and other lending institutions will ultimately do with access to alternative sources of data, but it is clear that the appetite for this data isn’t going anywhere. While consumers are rightly skeptical of giving up more data to banking institutions, by improving service and credit availability to customers, banks can create a new lending environment where everyone wins.

Tags: Alternative LendingEquifaxFICO
13
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Mercator Advisory Group analysts and industry professionals.

    Must Reads

    payments friction

    Too Much Payments Friction Can Lead to Customer Chafing

    March 28, 2023
    online fraud

    Understanding the Cost of Online Fraud and How to Prevent It

    March 27, 2023
    live shopping, ebay

    Q&A: eBay Exec on Live Shopping and the Future of Payments

    March 24, 2023
    AI and Biometrics in Regulatory Compliance in Finance

    The Importance of AI and Biometrics in Regulatory Compliance in Finance

    March 23, 2023
    Everyone Benefits from the Real-Time Payment Networks  

    Everyone Benefits from the Real-Time Payment Networks  

    March 22, 2023
    commercial payments

    Optimizing Commercial Payments in the Digital Age

    March 21, 2023
    cross-border payments

    Cross-Border Payments: Fighting
    E-Commerce Fraud Using Data

    March 20, 2023
    fraud, ChatGPT-4

    How to Fight Fraud While Still Enabling a Great Online Customer Experience

    March 17, 2023

    Linkedin-in Twitter

    Advertise With Us | About Us | Terms of Use | Privacy Policy | Subscribe
    ©2023 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    Menu
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • Recent News
    • Resources
    Menu
    • Industry Opinions
    • Recent News
    • Resources
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result

      Register to download the PayPal report