The benefits and opportunities of adopting a multi-bureau approach

Despite the large level of commonality of data sources, bureau ratings can differ significantly. This can be down to matching, storage and retrieval issues and scoring the data. For this reason, combining more than one bureau can result in a significant uplift in information quality - not to mention save you money.

That’s why it’s becoming more common for credit providers to consider a multi-bureau approach, to run fairer comprehensive credit risk assessments on an individual.

We believe this provides you with:

●      Better pricing and product availability - Bureaux often provide better terms on pricing and product  offering if they know they are competing against others.

●      Ease of switching primary data provider - This is great for keeping prices low for two reasons:

• Flexibility means data providers offer the best rates to discourage you from easily switching.
• There isn’t the usual cost of change as the systems are already in place.

●      More comprehensive data - If the primary data provider has insufficient data, the credit provider can easily look to the second data provider to fill in the blanks and increase the acceptance rate.

Case study: Multi-bureau in action

Recently one of our largest clients put us to the test. We did a custom data benchmarking exercise to help a leading bank that was using one Credit Referencing Agency (CRA), move to a multi-bureau approach so that it could get a primary and secondary price from their existing supplier.

The result? The existing price was reduced and they gained the flexibility to use a secondary provider, without the cost of the existing provider’s current pricing being raised.

If they choose to use a secondary provider and drop their volumes by 70%, the existing pricing will still be honoured. And if they choose to utilise the CRA as their primary data provider, they will receive a 30% discount.

Bonus result: Going through this process led to an alternative provider subsequently quoting and matching the primary pricing for secondary use. So now the client has great flexibility on volumes and price and can decide whether or not they multi bureau.

Why do some credit providers avoid multi-bureau?

These are the four most common reasons we hear:

1.     Cost of change (implementing new systems and scorecards)

2.     Unaware of the new flexible platforms that allow them to benefit from multi-bureau with low implementation costs

3.     Do not realise they are being overcharged

4.     Unaware that by using a multi-bureau approach, they can improve flexibility and save costs

Top tip: If you are looking to build a multi-bureau approach into contracts, ask for ‘stepped pricing’ or pricing for primary and secondary, based on lower and higher volumes - This helps you to ensure cost efficiencies, like in the case study above.

Final word

Credit criteria can vary from client-to-client, and product-to-product and any one bureau can give you much of what you need. But it seems pretty clear that the multi-bureau approach tests out as the best way to maximize your opportunity to reach 100% of the credit active market AND make significant cost savings along the way.

Just something to think about when considering credit data needs in the lending market we are in.