How credit technology facilitates responsible lending


Challenging environments

Lenders are currently receiving more pressure than ever to ensure credit is only provided or extended to consumers who can genuinely afford it. This process of managing a consumer’s financial capacity to fund new and outstanding debts is a significant challenge for the UK credit industry as a whole and a top priority for the industry’s regulatory authorities.

There are already a raft of regulations governing organisations that offer credit to consumers in relation to responsible lending and assessing affordability. Most recently, in response to the current economic situation and widespread pressure on disposable incomes, new guidelines have been issued which place the responsibility firmly with the lender – the responsibility to ask the right questions, but also to verify income and factor in the impact of wider economic conditions. But how can they do this effectively?

A new era for consumer credit

The manual processing used in the industry in years gone by meant that, at times, it wasn’t always possible to effectively gauge affordability, due to incorrect or lack of information. Moving paper-based processes online didn’t do much to rectify this initially – it replicated inefficient processes instead of optimising them; the same documents were required, just in PDF format instead of paper.

However, fast forward to present day and technology is transforming the way data is collected and used to improve lending outcomes for both consumers and businesses. This integration of technology within consumer lending has enabled lenders to have a greater understanding of customers through trended data, enabling them to re-think the requirements to originate a loan and adapt the workflows used to deliver an efficient, frictionless lending experience.

Technology offering flexibility

As well as being an effective way to check consumer affordability, technology can also quickly and efficiently cater for any changes in regulation, ensuring that credit is always given in line with the correct parameters. For instance, in Deko’s ‘decision engine’– where lenders put their policies in – the functionality means these policies can be adjusted and updated when necessary, seamlessly.

Real-time decision making

Technology has had a huge effect on the length of time it takes for a consumer to apply for finance, therefore improving responsible lending by putting real-time credit decision making on the front line, credit risk can be reduced through the integration of new data sources and the application of advance-analytics techniques. These improvements generate richer insights for better risk decisions, while banks and retailers reduce the risk of losing creditworthy clients as a result of slow approval processes.

The Deko way

Deko matches merchants with the right lender based on the specific lending criteria and gives impartial advice to ensure the best acceptance rate.

Deko also works closely with clients to design and build compliant solutions. These solutions don’t only include the extensive platform software and back office systems but also provide ad-hoc training for merchants, easy-to-understand scripts for telephone applications and advice for retailers on how they can advertise their finance offerings.

We’re also accredited by ISO, demonstrating our dedication to excellence and quality management systems.

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To offer finance through Deko, you will need:

  • Turnover of over £1m
  • Trading history greater than one year
  • Positive balance sheet

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