Trends in credit data: What to watch in 2024

The world of credit data is changing rapidly. In 2024, the rules of the game are evolving. Understanding these changes is crucial for optimising risk assessment, compliance, and customer management.

Ready to deep-dive into what 2024 has in store for credit data? If so, this is your go-to resource for staying ahead in a rapidly transforming sector. 

So let’s get to the good bit.👇 

Trend #1: The rise of multi-bureau approaches📊

The traditional method of relying on a single credit bureau is fading away. Financial institutions are increasingly adopting multi-bureau approaches. This trend is driven by the need for a more comprehensive view of creditworthiness, which has become especially apparent following the FCA’s findings which revealed major differences in credit data held between the main 3 CRAs.

When you pull data from various credit reporting agencies, you gain a richer, more complete snapshot of a consumer's credit history. The result? More nuanced risk assessments that can inform smarter lending decisions.

However, credit providers have faced roadblocks to adopting multi-bureau approaches. The cost and complexity of integrating data from multiple sources has been prohibitive. But the tide is turning, thanks to advancements in technology. Cloud-based delivery systems have simplified data integration and reduced costs. Financial institutions are now poised to reap the benefits of multi-bureau data.

The final hurdle? Streamlining multiple internal customer databases into a unified view. With new software solutions emerging, credit providers can finally aggregate internal and external data into a single source of truth on customer risk. The days of fragmented data are numbered.

Trend #2: Third-party decision platforms🧑‍💻 

The landscape is shifting, and third-party decision platforms are right at the forefront. These platforms integrate with multiple data sources, including credit bureaus, to deliver speedy and precise credit assessments.

Why is this significant? Speed and accuracy are the cornerstones of effective decision-making in financial services. Third-party platforms streamline these processes, reducing the time taken to arrive at credit decisions, all while boosting accuracy.

In the past, credit providers faced frustrating limitations with decision engines. Bureaucratic red tape and complex integrations made adapting decision rules time-consuming and expensive. Some of the major bureaus benefited from these rigid arrangements, while lenders languished in inflexibility and unnecessarily high data costs.

In 2024, we expect to see more credit providers exploring nimble, cloud-based decision platforms with user-friendly interfaces. With drag-and-drop functionality, they can promptly create new customer journeys and decision flows using in-house resources. This frees them from yesterday's models, empowering faster reactions to market shifts. 

Trend #3: Data-driven collections📅

Gone are the days when collections were a back-office function with little strategic impact. Now, data analytics are turning the collections process into a vital component of customer relationship management.

Incorporating predictive analytics can help you identify which accounts are most likely to go into arrears. This means you can proactively manage those accounts, reducing bad debt and enhancing customer relationships in the process.

In the past, lenders focused innovation on customer acquisition - arming front-end teams with the latest in fraud prevention and ID verification. But this is changing. 

In 2024, with concerning debt levels looming, proactive account management and collections are becoming strategic priorities. Lenders realise they can no longer afford to view collections as an operational afterthought.

The game changer? Earlier deployment of data-driven insights. Identifying vulnerable consumers and potential affordability issues sooner allows for more customised interventions. The result? Lenders stay ahead of the curve, while forging stronger customer relationships.

Trend #4: Data use across the customer journey🔁

Financial institutions are actively leveraging data to enhance various touchpoints in the customer journey. From onboarding to loan disbursement and even collections, data makes the customer experience smoother.

Think personalised offerings and faster approval processes. Data helps you understand your customers' behaviour and needs better, enabling you to tailor your products and services accordingly.

For example, electronic ID and verification solutions have accelerated onboarding by reducing dropout at the application stage. This means consumers no longer have to present documents in-person at a branch.

In 2024, we’ll see device recognition and image verification are also slashing fraud by validating application details in real-time. Is the applicant in the region they claim? Do their credentials match official records? These questions are answered in seconds, right within the application flow.

Trend #5: Sustainability in credit data��

The convergence of efficiency and ethics creates a sustainable model that can adapt to market fluctuations and emerging challenges. Companies that seize this approach are not just being responsible; they're strategically positioning themselves for enduring success in a fast-evolving landscape.

A key component of this sustainable approach is the FCA's new Consumer Duty regulations. These rules raise the bar for financial institutions to focus on true customer needs - not profits. Firms must now provide understandable communications, fair products and pricing, and helpful support.

By putting the customer first, companies can build trust and loyalty. This focus on transparency and service will pay dividends as firms comply with Consumer Duty. Institutions that embrace this sustainable ethos will thrive in the long run.

Trend #6: Transparency and fairness🪟

The call for transparency in credit data management is a seismic shift that's redefining industry standards. But what sets organisations apart isn't just acknowledging this change; it's embedding transparency into the very fabric of their business models. Doing so not only elevates ethical standing but also adds a layer of competitive advantage that's hard to replicate.

This drive for transparency brings actionable insights to the forefront, allowing credit providers to negotiate contracts with a fuller understanding of market rates and data quality. It dismantles opaque practices that often cloud the industry, replacing them with a model that empowers both the provider and the client to make informed, fair decisions.

Transparency also enables greater accountability. With clear visibility into data sources, methodologies, and usage, firms can ensure alignment with regulations and best practices. This proactive approach to accountability promotes consumer trust in an industry often plagued by skepticism.

In 2024, perhaps most importantly, transparency will help lay the groundwork for fairness. Shedding light on processes curtails the potential for bias and imbalance. 

Wrap-up: 2024 and the next era in credit data management

The trends we've explored reveal a turning point for credit data management in 2024. Sustainability and transparency are becoming indispensable pillars —not just options for staying competitive.

The rise of multi-bureau approaches, third-party decision platforms, and data-driven collections demonstrate the increasing value of comprehensive insights. Meanwhile, optimising the customer journey and focusing on consumer needs signal a shift toward service-driven business models.

Together, these trends push the boundaries of what effective credit data management looks like. They present an opportunity for forward-thinking institutions to redefine industry norms by fully embracing transparency and sustainability.

The bottom line? 2024 requires more than reactive adaptation. To truly excel, organisations must take a proactive leadership role. Success will be defined by how well firms strategically embed transparency into their operations while sustaining a razor-sharp focus on ethical data use and consumer needs.