Risk Asessment

What is risk?#

In lending, risk refers to the possibility of borrowers’ failure to repay their loan, resulting in a loss for the lender. Lenders lose money because cash flows get interrupted and collection costs shoot up. Some common forms of credit risk include default, fraud, regulations, risks from the market, competition, the economy and the government.

How is it measured?#

Lenders measure risk by taking into account borrowers’ credit histories, capital, repayment ability and the condition of the loan and its collaterals.

Why risk assessment is broken#

  • Short-sighted credit scores - Credit bureau scores used widely by lenders fail to account for several factors pertinent to borrowers’ ability and intent to repay loans. Moreover, these scores are dated and fail to show customer creditworthiness transparently.

  • Biases in lending - Historical credit decisioning data is riddled with biases around gender, pincodes and more. This leaves out large numbers of creditworthy borrowers and allows exclusionary financial practices to fester.

How you can use FinBox to overhaul risk assessment#

  • DeviceConnect - FinBox DeviceConnect takes cues from customers’ device data to determine the repayment intent and ability of customers. It categorizes customers into various buckets based on this data and communicates these insights to lenders a week before the due date.

  • BankConnect - FinBox BankConnect product helps customers seamlessly offer access to their bank statements for analysis. The analyzer gives you insight into the cash flows of the borrower for underwriting purposes.

  • Account Aggregator - FinBox Account Aggregator can enable platforms to access data from financial institutions after explicit user consent. This added layer of insights strengthens our underwriting stack to deliver more accurate results.

  • RiskEngine - FinBox RiskEngine combines insights from its DeviceConnect and BankConnect products with data sourced from Account Aggregators, cash flow data, GST data and platform data for a well-rounded credit risk assessment.

Benefits#

  • Lower fraud - FinBox helps you reduce the instance of fraud by X% by covering blindspots during onboarding as well as collections.

  • More approvals - Lend to 25% more customers as FinBox gathers data on more thin-file, new-to-credit customers than traditional assessment measures.

  • Less defaults - Lower your instance of default by 30% with real-time data monitoring in our risk prioritization and early warning systems.

  • Collection intelligence - Gain access to enriched data insights well before the due date to tailor your collections efforts accordingly for lower defaults.

  • Easy integration - FinBox’s risk engine can be integrated into your existing loan journeys, seamlessly.

  • Improved customer experience - We not only make it easy for you to deploy our risk engine within your platform, but also allow your customers to share their relevant underwriting and identification documents without interrupting the journey.

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