Opinion: Why the right data and not more data is key

20 December, 2022

Ivis Aguilera

When it comes to financial services, what is a data strategy and how can you optimize it for more accurate, smarter risk decisioning? The answer isn’t more data, it’s the right data – at the right time. According to IDC, “this year alone, over one hundred thousand exabytes of data will be generated, crossing the 100k threshold for the first time.” Yet 74% of decision-makers we surveyed said they struggle with their organization’s credit risk strategy because data is not easily accessible. The data is there, but it’s an incredible amount of wasted effort if you don’t know which data sources to use when.

When developing a data strategy for your financial services offerings, you need to look for ways to minimize costs and maximize innovation. And that means being able to select only the data you need, exactly when you need it, to make more accurate decisions across credit, identity, and fraud. According to McKinsey, “industry leaders tap multiple internal and external data sources to improve the predictive power of credit signals… both the internal and external data sources used in a credit-decisioning model will affect the decision quality.”

What can the right data do for your decisioning strategy?

As McKinsey put it, “Data marketplaces enable the exchange, sharing, and supplementation of data, ultimately empowering companies to build truly unique and proprietary data products and gain insights from them.” When it comes to risk decisioning specifically, that translates into several key benefits – and competitive advantages:

• Greater financial inclusion
• Improved customer experience
• Improved accuracy in your decisioning
• Minimized data costs
• Scalability

Types of data that are critical to optimizing your decisioning strategy across the lifecycle:

• Identity Data: Verify identities and documents for better onboarding compliance, prevent identity fraud, and be sure that you are protected with ongoing due diligence data
  • Includes: KYC/KYB, PEPs/sanctions, document verification, synthetic ID fraud

• Fraud Data: Identify potential first-party and application fraud in real-time to proactively detect/prevent fraud and reduce losses; minimize false positives by leveraging signals from mobile, email, behavior, device, IP, social and other fraud data sources.
  • Includes: Email and mobile data, global fraud intelligence, social validation, device data, IP, and geolocation

• Credit Data: Minimize credit exposure and loss by leveraging credit bureau, open banking, and alternative data sources. Ensure greater financial inclusion, optimized credit onboarding, and add value throughout the entire customer lifecycle with dynamic customer risk profiling.
  • Includes: Credit bureau data, business data, open banking and alternative data including social media, rental payments, travel info, utilities and more

Data supply chain challenges and how to overcome them

Choosing the right data can seem daunting, but it’s critical to have an optimized data supply chain to deliver the most effective products to your customers. These are some of the most typical challenges known to slow down deployment of even the most well-thought-out data strategies:

• Identifying relevant local data sources
• Negotiating multiple contracts
• Complying with varying regulations
• Ensuring data privacy for different regional requirements
• Normalizing data formats
• Building and maintaining integrations
• Supporting global strategies

But you can overcome these challenges by ensuring you have the right data for each product offering you have. How? Work with a partner that provides an all-in-one data solution. Building your own data supply chain is possible, but it’s time-consuming and resource intensive. If you want to work with a partner look for a data solution that offers:

• One data contract that provides access to multiple data sources
• A single API to replace numerous integrations
• A wide variety of data types and sources, including alternative data
• Expert data source curation customized to your needs, that can be easily modified as your needs evolve
• Simplified, no-code data supply chains that non-technical users can understand and control
• Global data access, as well as local sources, to ensure success of both regional tactics and the ability to iterate and expand to new markets
• Seamless integration into your decisioning technology to ensure accurate, smarter decisions

Simplifying your data supply chains (sourcing, building, integrating, and maintaining data sources and connections) and optimizing your data strategy is critical to continued success – and your competitive advantage. Accessing the right data at the right time means enhanced risk models, strengthened onboarding processes, more accurate (and inclusive) decisioning across the lifecycle, and optimized customer experiences.

Ready to unleash the power of data? Meet Provenir Data.

Jose Vargas is General Manager and Executive Vice President, LatAm, at Provenir, which helps fintechs and financial services providers make smarter decisions faster with its AI-Powered Risk Decisioning Platform. Provenir works with disruptive financial services organizations in more than 50 countries and processes more than 3 billion transactions annually.