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Like all other businesses, fintechs are entering the planning and budgeting season at a time of high economic uncertainty.
The difference is, all credit providers are being relied on to support consumers and the economy. So, whilst cutting back on certain costs – such as operations – is not an option, there is one quick win fintechs can take advantage of.
It’s one that doesn’t impact service quality or productivity. And that’s bureau costs.
In this blog, we’ll look at how you can review your bureau pricing and packages right now and how you can negotiate the best deal available.
Myth busters: It does not necessarily mean you need to switch providers. It’s more about getting a rate comparable to peers. And you do not need to wait until the end of your contract – you can renegotiate at any point.
Let’s jump in…
How to review credit bureau pricing and packages
There is a lack of objective, evidence-based insight into how each bureau measures up against each other. This makes it near impossible to compare credit bureaux and to see how your pricing stacks up.
With other product and service providers, pricing is often easily displayed on their website so you can easily compare rates, which gives a sense of fairness.
But, this isn’t the case for credit bureaux and we’ve seen them take advantage of this — inflating prices by up to 500% more than a competitor is paying for the same footprint of services.
The result? Significant unnecessary costs are being incurred by individual fintechs (up to millions).
This is where one lesser-known tool comes in: data benchmarking.
Data benchmarking allows fintechs to address the significant gap in the credit community by providing evidence-based benchmarks and evaluating data quality and accuracy with complete pricing transparency.
How? By comparing over 80 performance metrics (information that isn’t readily available) and benchmarked pricing data from hundreds of UK and global businesses.
As a result, fintechs have seen an average cost saving of between 25% - 40%... Saving businesses over £30m in the last three years alone.
There are 6 simple steps to data benchmarking:
Analyse contracts and variations
Benchmark pricing for each data element
Identify inflated charging
Pinpoint the most easily achieved savings
Provide a view on further potential savings
Identify additional strategic decisions that could be considered
📕 You can learn more about data benchmarking here.
A best practice framework for bureau negotiations
Once you have your data benchmark, you can use it as part of your negotiations to get better deals. Here’s an example of how:
1. Capture your team’s needs
Before doing anything, understanding the type of data and the volumes that the credit risk team’s need is crucial.
2. Take advantage of your procurement position
Information is power. Be more prepared than the salespeople, including gaining a better knowledge of the market.
3. Create leverage with benchmarks
An effective data benchmarking exercise eliminates underspend, optimises cost savings, and provides access to new data sources. You can see how your pricing, quality, and accuracy differs across industries, sectors, and competitors. And clearly understand the difference between what you’re paying compared to what your supplier is charging your fintech peers.
4. Build alternatives
The balance of power in negotiations always shifts when there are alternatives. By developing a shortlist of outside suppliers, you gain the power you need to walk away from an unappealing deal.
5. Carefully negotiate
Many vendors have been trying to increase customer lock-in through large and complex enterprise agreements that may, at first, appear to be heavily discounted. But without careful negotiation and planning, these agreements can easily become ineffective.
6. Reassess needs and packages
Finally, at any time during your contract, you can review how many searches you are using, and whether you need additional data sources like Open Banking.
Another key point, (contrary to belief) you can renegotiate your contracts midterm for a better deal or additional sources of data.
Wrap up
In conclusion, acting now enables you to quickly reduce costs to protect your business and ultimately so you can better support consumers.
Essentially, the lower your credit data supplier costs, the more likely you can pass on savings down to consumers — whether that be discounts, reduced rates, or offering more products to more customers.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Damien Dugauquier Co-Founder & CEO at iPiD
30 October
Kyrylo Reitor Chief Marketing Officer at International Fintech Business
Prashant Bhardwaj Innovation Manager at Crif
Philipp Buschmann Founder & CEO at AAZZUR
29 October
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