Metrics Monthly | December 2019 | UK Edition

Metrics Monthly | December 2019 | UK Edition

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Metrics M onthly

UK EDITION December 2019

In this issue WANT TO BE “NO-PLATFORMED”? Why lenders without automated underwriting are failing to compete online

In this issue Welcome Page 03

A LendingMetrics Christmas Page 04

In the news Page 05

Want to be “no-platformed”? Page 06

A new partnership Page 08

f

We were awarded the innovation star award

A Year in Review Page 09

for winning Best Credit Risk Solution 3 years in a row

Auto Decision Platform Page 10

ur

We launched our company newsletter Metrics Monthly

Do you use risk-based pricing? Page 11

S

Case study Page 12 live

3 eet

We were the first Open Banking platform to go with

Bank

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We grew our social media presence

02 | Metrics Monthly

December 2019 | UK Edition

Welcome

Contacts

Call us +44 (0) 2394 211010 Email us [email protected] Visit our website www.lendingmetrics.com

It’s the most wonderful time of the year, and it’s been an event-filled month for us at LendingMetrics. December saw us host our annual Christmas staff party as a way for management to thank team members for all of their hard work this past year. We also got into the festive spirit and raised money for charity with Save the Children’s Christmas Jumper Day . It was an intense month in UK politics as well, with the shock general elec- tion being held just two weeks before Christmas. You can read LendingMet- rics’ view on the election on page 5 .

Our headline piece this month asks if you want to be “no-platformed”? and considers why lenders without automated underwriting are failing to compete in the online market. Over the Christmas break, why not take a visual stroll through our highlights of 2019, in A Year in Review on page 9. This month’s case study looks at how not-for-profit lender Fair For You was able to significantly grow their loan book by automating their decisions. We hope you enjoy reading this issue of Metrics Monthly and look forward to seeing you in the New Year. Remember, if you haven’t subscribed yet, you can do so on our website, here .

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+44 (0) 2394 211010 | www.lendingmetrics.com

Metrics Monthly | 03

A LendingMetrics Christmas

Staff let their hair down to celebrate a successful 2019

Above: The LendingMetrics UK team celebrated the end of a great year at Langstone Quays Resort on Hayling Island, Portsmouth

The LendingMetrics team celebrated Christmas in style this month at the Langstone Quays Resort on Hayling Island, Portsmouth. The black tie event was attended by all staff who enjoyed an evening of drinks and dancing, including a three course meal.

The party was a great opportunity for staff to let their hair down after a busy and triumphant year, as well as a way for the Senior Management team to thank staff for all of their hard work during 2019, in what’s been our most successful year yet.

Head of Operations Paul Brown com- mented: “The LendingMetrics Christ- mas party was an excellent event. It was great way to celebrate the achieve- ments of 2019 as a team. We are all looking forward to seeing what 2020 brings!”

Above: Celebrating a strong first half of the year at our summer event

Above: Proud winners of the go-karting team event held earlier this year

04 | Metrics Monthly

December 2019 | UK Edition

In the news

PM Boris Johnson’s Conservatives won the election with a majority of 78

Christmas Jumper Day

We took part in Save the Children’s Christmas Jumper Day on Friday 13 th December!

We were delighted that the general election delivered a decisive result on the 13 th December.

The United Kingdom now has a government with a strong working majority allowing it to deliver on its agenda.

We got together for a cracking day in our festive knits and donated money to Save the Children, to make the future brighter for children all around the world. Every pound we raised will give children in the UK and around the globe the chance to grow up healthy and happy, so they can become who they want to be.

The news brings with it questions about how the results will affect the credit and loans industry. According to the Federation of Small Business- es (FSB), the result of a majority gov- ernment will be positive for smaller firms. National Chairman Mike Cherry said “small business owners will be hoping that today’s result helps to bring stability back to the economy. After more than three years of Brexit absorbing government bandwidth, the Conservative Party has pledged to tackle the many domestic chal- lenges that have been neglected during that time.” During the election campaign, the Conservatives promised they would

help small firms by introducing a reform package to end the late payment crisis and by extending and expanding business rates discounts. Whilst we won’t know if the new government will entirely keep these promises, we do know that it is as important as ever that they nego- tiate a good exit deal with the EU. Cherry stresses the significance of this: “We have to avoid a scenario where we suddenly crash out of the EU with no time for small firms to prepare for what’s coming next.” Brexit talk aside, a majority govern- ment is something that the UK has needed for many years. We as a company now look forward to 2020 with even greater optimism.

What could Save the Childen do with the money we raised? • £2 could pay for antibiotics for eight children suffering from pneumonia • £5 could buy a winter jacket for a child in Syria • £20 could provide a mother and newborn baby with vital supplies

+44 (0) 2394 211010 | www.lendingmetrics.com

Metrics Monthly | 05

Want to be “no-platformed”? Director of LendingMetrics, David Wylie, says lenders without automated underwriting are failing to compete online

We can all think of historic examples of new technology that took a while to get off the ground. Fax, email, online shopping, banking apps, were all at one stage the domain of a select few ‘early adopters’. Then, after a while, they reached a tipping point and took off. When they did, the select few became many, and then the many became the majority, until you were pretty much left

in the Dark Ages if you did not embrace them. There aren’t too many people left who do not use a smartphone or a banking app. Automated underwriting is now just at the tipping stage, where it is beginning to move beyond the early adopters. Within 18 months, I know it’ll be a big priority for those lenders yet to have it in place. Like all the other technologi- cal advances that have gone before it, they’ll want it because they’ll suddenly see the advantages that make the dif- ference between success and failure.

The most obvious is that users of auto- mated underwriting can be quick, very quick, compared to businesses run along manual lines. Once an application is completed, the yes or no decision is practically instant. Only referral cases need take longer. Instead of the tradi- tional wait at the end of the application form, the consumer has a result. Then there is cost. Users have a big overhead advantage, which can be used to offer more favourable loan terms or increase profitability.

06 | Metrics Monthly

December 2019 | UK Edition

Instead of a team of underwriters, they can process more applications with far fewer staff. Because the application decisioning is automated, the human underwriter only has to deal with un-typ- ical referral cases that require human intervention, or is free to focus on other areas such as customer retention. But, the killer advantage often over- looked, is that automated lenders can be open for business online 24/7, and make rapid lending decisions 24/7. Because the process is automated (barring a small proportion of refer- rals) there is no need to be restricted to Monday to Friday, 9-5pm office hours. I can’t overstate this when it comes to competing on the increasingly-used internet lending platforms. Those looking for a loan will often be time- short and want a quick yes/no decision. Not a ‘thanks for your application’ and a wait.

Only if you run automated underwrit- ing will you be able to give them their instant decision. What is more, the pur- chasing platforms that attract internet users surfing for finance demand this sort of decision speed. You can imagine the difficulty trying to participate in this channel if you have manual processes. You might have to provide a ‘dumb’ response to a lead that you have paid for, along the lines of ‘your loan is being considered, we will get back to you shortly’. You have bought the lead ‘blind’, as it were, and during the time you are doing your manual underwriting, the prospect is free to continue their internet searches and find other loan providers. By the time you get back to the pros- pect with the offer of a loan, they may well have secured another loan(s) else- where. They may then accept two loans, but can only afford to service one, so your profitable case turns out not to be.

In a digital age where consumers want instant gratification, the screen needs to read ‘Your online loan application is successful, please check your bank account’, rather than ‘Your loan request is being processed, we will be in contact shortly’. Once a prospect is on a site and clicking, you can’t afford to give them the time to look elsewhere, because they will. Finally, and perhaps more significant over the longer term, automated lenders are going to have the ability to leverage the emerging new sources of >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14

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