After a sharp dip in 2020, the volume of payments made on credit cards continues to rise

The cost-of-living crises may further complicate lender portfolios, leading to more marginal credit-increase decisions and a growing requirement to be responsive to the needs of potentially vulnerable customers.

To make the best decisions across the customer lifecycle, lenders need a better understanding of applicants and customers. A powerful way of doing this is by finding insights in transactional data.

To enable this, Experian Digital’s fast APIs help lenders automate transaction categorisation in their own data and easily analyse credit card transactions. The credit card behavioural insights can help to:

  • Improve the predictive power of risk models
  • Make better marginal decisions about increases
  • Proactively reduce credit limits where necessary
Better information and improved decisions with transactional data

By looking deeper and getting into the gritty detail of transactional data on credit cards, lenders can gain insights that allow them to increase lending while maintaining a desired level of risk, act earlier to reduce exposure to bad debt and help customers through one-off life crises.

Increase lending while maintaining a desired level of risk

  • Improve risk models – Transactional insights make credit-limit risk models more predictive, allowing lenders to lend more responsibly and without taking on higher-risk credit. It is an especially powerful tool for the most difficult borderline decisions.
  • Monitor portfolio health with less delay – Regularly analysing transactional data provides lenders a more up-to-date view of their portfolio’s health, allowing them to act earlier where necessary.
  • Identify transactions linked to risk of default – By spotting transactions indicative of low or high-risk behaviour, lenders gain a better understanding of their customers. For instance, are they using cards to provide protection on big-ticket purchases, or are they rotating debt from other existing loans? This insight can be used to manage credit limits accordingly.
  • Spot vulnerability quickly – Be able to spot changes in behaviour that may be indicative of emerging vulnerability. Identifying these changes early allows you to proactively manage vulnerable customers at a time of increased financial stress.
Act earlier to reduce exposure to bad debt

Transactional insights help lenders identify early-warning signs in a customer’s behaviour before they move into arrears and provide support accordingly. Spot customers on the slide sooner. With this information, lenders can make proactive decisions to avoid customer delinquency, either through restructuring repayments or by restricting further access to credit.

Help customers through one-off life crises

Understanding a customer’s buying habits in depth means lenders can offer a service specifically tailored to their situation. Rather than making snap decisions to restrict credit after observing financial shock, lenders can use transactional insights to spot indicators that a customer is experiencing a difficult one-off life event. Using that insight, lenders can help customers through these events with supportive repayment decisions and more sensitive interactions.

For customers, credit card expenditure analysis allows their lender to manage credit in a way that is well-informed and well-intentioned. Lenders can do this in a way that creates more meaningful and loyal relationships. It also allows for early identification of spending behaviour that can highlight vulnerabilities so that the most at risk can be protected.

To learn more about how we can help, please get in touch with us using the form below.