How Consumer-Permissioned Data Is Reshaping Online Lending

Honor Donnie  |  November 4, 2019   |  Credit & Lending  


The days of sitting in a bank branch waiting to apply for a loan have come and gone. Online lenders have successfully shifted the traditional lending model into the digital age with the help of an unsung hero: consumer-permissioned data. With benefits for both lenders and consumers, consent data is a powerful form of alternative data that improves the customer experience and leads to faster, more accurate credit decisions. 

What is consumer-permissioned data?

Consumer-permissioned data is the transactional and account-level information that a consumer gives a business permission to access on their behalf. Also known as consent data, it provides personalization balanced with privacy for consumers and growth balanced with accountability for lenders. Consumer-permissioned data requires that companies be transparent about what consumer data will be used for, that their data will only be used for that purpose, and that consumers have an avenue to request for their data to be removed.

Some would say that transparency in exchange for market expansion is a fair tradeoff for online lenders. Consent data creates an opportunity for lenders to expand their marketable population and regain lost revenue from decline traffic. With greater insight into consumer finances across new accounts and account types, lenders have more data to consider, and consumers have a greater chance of being approved for a loan. Call it a win-win situation for both groups, if you will. 

5.5 million consumers are able to move into prime or near-prime score bands when non-traditional credit data is considered.

As a consumer, consent data empowers you to build your own online financial identity. Equifax estimates that 5.5 million U.S. consumers are able to move from unscorable or subprime credit score bands into prime or near-prime score bands when telecom, utility and other non-traditional credit data is considered. So by providing more data to lenders – through a secure, consent-based channel – you have the power to change your credit future. 

How is consent data making a difference in lending?

Leveraging consent data has allowed lenders to better understand a consumer or small business’ story. Kabbage is a great example of this. This fintech and data company has successfully shortened the loan application process to about six minutes with automation. Thanks to consent data, applicants can share revenue, accounting data, business transactions, and whatever else may help their application. Kabbage uses consumer-permissioned data to keep the customer in control of the data they provide, while seamlessly improving their chances of success. 

Prosper Loans achieves similar benefits from consumer-permissioned data, though its lending methods are different. The peer-to-peer lending platform provides unsecured personal loans of up to $40,000 for any purpose, including debt consolidation. Because peer-to-peer loans spread the risk across several investors, getting a loan requires stringent verification. 

While Prosper may not have digitized the entire experience – faxing in proof of residence, for instance – the lender still keeps the customer aware and in control of the data they provide. Ultimately, this innovative lending model enables more consumers to gain access to credit while at the same time minimizing individual risk.

Consent data allows lenders to create a streamlined user experience that keeps customers online and in control of their own data.

Consent data changes the reality of online lending by expanding what lenders can see in a consumer’s financial profile. It also allows lenders to create a streamlined user experience that keeps customers online and in control of their own data. However, despite increased availability of consumer-permissioned data, adoption by lenders is lagging. Despite representing more than 25 percent of consumer spend, alternative data sources like rent, utility, cable, and telecom tradelines have been severely underreported. 

Access consumer-permissioned data today

Here at Urjanet, we aim to help lenders realize the full value of consumer-permissioned data with easy, automated access.  Through our alternative data platform, end users can opt-in to link their utility, telecom and cable accounts to a lender with an encrypted online process. With a consent-based model, lenders can gain new insights into consumer profiles and consumers can stay in control of the data they share. 

Interested in reshaping how your company approaches online lending? Get a demo of our alternative data platform today.

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About Honor Donnie

Honor Donnie is a Marketing Coordinator at Urjanet, with a passion for content creation. When she’s not at Urjanet, she can be found reading, cooking, and listening to great music.

Tags   Alternative Data   |   Consumer-Permissioned Data   |   Credit   |   FinTech   |   Non-Traditional Data   |   Online Lending   |   Risk Assessment   |   Urjanet   |