Turning Customer Conversations Into Actionable Insights

Customer conversations are a gold mine for business innovation, ValidiFI Customer Operations EVP Mark Lashmar writes in a new PYMNTS eBook, “The Listening Economy: How Customer Conversations Are Transforming Financial Services.”

A leading lender faced a critical issue in its application approval process. New applicants met all approval criteria, but shortly after they were onboarded, the lender discovered that these applicants switched to using high-risk accounts — ones that the lender would never have approved had they known the applicant’s history with them.

The lender was underwriting consumers during acquisition, where decisions were made in milliseconds using data purchased to identify lower-risk consumers; but unfortunately, the lender had to stop the lending process as it found the consumer was looking to switch to fund a high-risk account. Had the lender known this was the original intent of the consumer, it would not have invested in acquisition costs. Not only was this negatively impacting its bottom line, but the business was also facing increased fraud exposure, putting the lender at even greater financial risk.

The customer’s core question was: “How can we identify risky accounts associated with the consumer in real time and prevent this type of situation before it happens?”

This was a pivotal moment because it highlighted a blind spot in traditional bank account verification. The lender could verify bank account information provided at the time of approval but had no way of knowing if the consumer had a history with a flagged high-risk account. This gap in intelligence left the company vulnerable to potentially fraudulent activity and unnecessary financial losses.

To address this challenge, we worked closely with the lender to create a solution to go beyond standard bank account validation. By leveraging our vast network of banking data, we helped the lender:

• Identify applicant history with high-risk accounts before finalizing approval
• Detect changes in bank account usage in real time to flag risky behavior
• Automate risk scoring and integrate it into their underwriting process

Of its some 146,000 applications, the lender initially identified about 1.2% of those as high-risk accounts using our vIndex solution — and denied those applications. However, when we looked at the sample of 146,000 closer, we were able to identify that 75.5% of those account holders had more than one bank account tied to their social security number (SSN). And when we broke it down even further, we were able to determine that not only did that population have additional bank accounts, but 35.5% of consumers were linked to high-risk accounts in the past. And of those accounts, about 22% of the applicant population used those accounts in the past six months, and almost 26% had used those high-risk accounts in the past year.

Customer conversations are a gold mine for business innovation. By listening to the customer’s concerns and implementing a proactive risk management strategy, we helped transform their underwriting process — turning a reactive approach into a predictive one. And since then, we have been able to roll this out to other lenders and integrators who were suffering from the same problem and were looking for a way to solve for it — until now.

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