LexisNexis Risk Solutions Report Reveals How Financial Institutions Are Regaining Visibility into Consumer Creditworthiness Through Alternative Credit Data
Rhea-AI Summary
LexisNexis Risk Solutions released its Global Consumer Lending Confidence Report, revealing that 40% of financial institutions reported increased delinquencies in the past year. The study shows that 97% of lenders identify collecting delinquent loans as their primary challenge, while 78% cite issues with visibility into negative payment history. To address these challenges, 66% of respondents are considering expanding the use of alternative credit data. The study, conducted across nine countries with 434 financial institution employees, found that 86% of global lenders feel more confident using alternative credit data compared to traditional methods.
Positive
- 86% of global lenders report increased confidence when using alternative credit data
- 66% of institutions are expanding alternative credit data usage to enhance risk assessment
Negative
- 40% of financial institutions report rising delinquencies over past 12 months
- 91% expect delinquencies and defaults to remain same or increase over next 12 months
- 59% of global lenders report decreased confidence in traditional credit data assessment
- 78% face challenges with visibility into negative payment history
News Market Reaction
On the day this news was published, RELX declined 2.09%, reflecting a moderate negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
Forty percent of FIs Report Rising Delinquencies Amid Growing Economic Pressure
Global financial institutions and consumers are navigating economic and regulatory changes. Lenders are seeking more effective ways to predict risk by increasingly turning to alternative credit data to supplement the traditional credit data used by lenders for decades to assess consumer credit risk. According to
Compared to 2023, lenders are less confident in making consumer lending decisions based solely on traditional credit data. Seventy-eight percent (
"Financial institutions attempting to assess creditworthiness with traditional credit data alone are competing with one hand tied behind their back. Lenders must embrace alternative methods," said Kevin King, vice president, credit risk at LexisNexis Risk Solutions. "By leveraging comprehensive data insights, financial institutions enhance their risk assessment capabilities, optimize loan portfolio performance and achieve superior financial outcomes."
The study involved 434 financial institution employees across nine countries, including
Key Findings on Consumer Lending Confidence:
- Top Challenges for Lenders: Ninety-one percent (
91% ) of global respondents expect delinquencies and defaults to remain the same or increase over the next 12 months. Organizations also encounter challenges in attracting new qualified borrowers, retaining existing customers and accessing and using external data. - Waning Confidence in Traditional Credit Data: Compared to a year ago,
59% of global lenders are less confident in their ability to compete in making consumer lending decisions with traditional credit data alone, noting gaps in traditional data's ability to assess credit risk. As regulations change, the use of non-reported financial products increases and credit reporting practices shift, the predictive performance of traditional credit data may be waning. - Adoption of Alternative Credit Data:
86% of global lenders are more confident when making consumer lending decisions using alternative credit data compared to a year ago. This confidence stems from alternative credit data closing visibility gaps in understanding consumer credit health. Lenders currently use alternative credit data for pre-screen marketing, loan origination, portfolio management and collections.
Download the 2024 Global Consumer Lending Confidence Report.
Methodology
The study surveyed 434 individuals globally from financial institutions responsible for lending or risk operations, all possessing significant knowledge of these functions at banks, credit unions, and non-bank lending institutions of varying asset sizes, to explore industry challenges. The survey evaluated their confidence in traditional credit data and the use of alternative credit data and scores in consumer lending. Alternative credit data includes decision-making information that integrates life event insights such as professional licenses, asset ownership, and public records, along with modern credit-seeking behaviors from sectors like online and short-term lending.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data, sophisticated analytics platforms and technology solutions to provide insights that help businesses across multiple industries and governmental entities reduce risk and improve decisions to benefit people around the globe. Headquartered in metro Atlanta,
Media Contact:
Ade O'Connor
+44 7890 918 264
ade.o'connor@lexisnexisrisk.com
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SOURCE LexisNexis Risk Solutions
FAQ
What percentage of financial institutions reported increased delinquencies in the LexisNexis 2024 report?
How many financial institutions participated in the LexisNexis Global Consumer Lending Confidence study?
What percentage of lenders are more confident using alternative credit data according to the 2024 report?
