Credit risk

Here’s how to compare desktop data pricing for the credit risk product

The credit data landscape is more competitive than ever, with fintechs taking advantage of innovations such as Open Banking. Moreover, new unsecured loan options like BNPL even exceed the use of credit cards. But with credit bureaus charging organizations different prices for the same data, fintechs have a much greater need to understand how their contracts compare to those of their competitors.

Partly due to the lifting of the bureau pricing veil, we’ve seen a huge power shift in the relationship between credit providers and bureaus, making it much easier for fintechs to get better prices to compete. inferior integration and marketing. costs of their peers. Simply put, more and more organizations are realizing the need for transparency and the ability to break down opaque barriers so they can evaluate the best quality data options at the best possible price.

So, in such a highly competitive niche market, how exactly do you compare desktop data prices to get the best results for your fintech? Let’s take a closer look.

The challenge of comparing office data

Credit data is a very niche and complicated industry in which there are no published prices. The result? It is extremely difficult for credit risk and procurement teams to compare products and it is almost impossible to compare products identically.

Yet access to high-quality data is essential in the credit industry to ensure improved credit scorecards for credit companies and to enable fair and transparent credit decisions for consumers. This is why a major change is needed and the regulator has stepped in…

Currently, there is a lack of standardization of the data provided by each office and the costs that lenders pay for the same volume of searches. And that’s why the FCA’s Woolard review shone the spotlight to include this area as one that needs change in order to benefit consumers.

Read more here: Improving Consumer Credit: An In-Depth Analysis of FCA Recommendations.

In addition, the review raised concerns about the complex data and technology contracts currently provided by bureaus that prevent credit providers from taking advantage of the wider market with clear transparency on data quality and pricing. It also makes it costly for fintechs to switch and thus allows rating agencies to keep prices high and reduces the availability of offers for the consumer.

For procurement teams in other industries, access to data to compare suppliers is not a problem. They are able to collect data from previous years, directly compare provider rates and therefore understand how to negotiate the best deal. Until recently, this was not something that was available to credit risk teams. And it’s all thanks to benchmarking data.

For more information on data pricing, see our previous blog: The State of Data Pricing: A Look Behind the Curtains.

Why are comparables important for credit risk?

Essentially, knowing exactly what other fintechs are paying for the same data, through each desk, provides credit risk and procurement teams with the information they need to facilitate contract negotiations. This helps them get the best result for the business as a whole and for the customers (more info here).

It might seem obvious – not being offered the same discounts as competitors is a major loss. But no
just financially for the credit provider. Paying more for data means risk and marketing teams have less flexibility to attract and onboard new customers, which can impact revenue and profits for the entire business.