Roadmap to build competitive advantage with data and insights

Jens Verboven

5 Mins

Belgium is a true SME country. No less than 99% of all companies in our country fall under the definition of SME. Together they represent 38% of GDP. They therefore represent a huge market potential and a coveted prey for numerous other companies. These can already stay one step ahead of their competitors if they automate their credit and risk management underwriting processes, ensuring smooth and efficient onboarding.

Recent shock situations, such as the COVID-19 crisis, rising energy prices or wage indexation, have underlined how important it is for SMEs to hold reserve capital. On the one hand, to build up the necessary buffers and shock resistance. On the other hand, to also promote growth prospects. It is therefore crucial today that companies thoroughly streamline the underwriting process towards SMEs and do not blindly go into business with the first best counterpart. An automated system and optimal protocols to manage risk are already very helpful in meeting today's unique challenges.

Below is a practical roadmap to optimise your business processes and secure a competitive advantage.

1. Get an overview of the risks

The first step is to get a clear picture of the SME landscape and its credit, fraud and compliance challenges and risks. This means bringing together all the necessary insights and indicators beyond traditional financial analysis, AML profiling and more into a single platform. From there, you should be able to make quick decisions based on accurate insights.

2. Choose the right data and insights provider

Secondly, choosing the right data and insights provider is a crucial part of a successful transformation. A lot of data providers specialise in credit risk and related use cases. It is essential to thoroughly evaluate their offerings if you want to discover new insights that deliver immediate value.

A unique fraud indicator, for instance, is an effective way to mitigate (costly) fraud risks. After all, fraudsters are adept at putting up a trustworthy image, reinforced by a positive credit rating. But that is only a sham and based on inaccurate, manipulated financial information. By partnering with a data provider that can expose such practices, companies can protect themselves from such scams and the misery that comes with them. At the same time, by doing so, they gain a competitive advantage in the market. So, it is crucial to weigh innovative solutions, data, and insights from different providers. Subject them to thorough scrutiny to ensure your company stays ahead.

3. Ensure accuracy and reliability

Third, assessing the accuracy and reliability of your scorecard or your decision engine is crucial to make informed decisions and reduce risk. Before implementing the system, it is important to set up testing and validation procedures. Using historical data and test data, you should evaluate the prediction rate and calibration of the process. By monitoring key metrics, such as the percentage of false positives and false negatives, you can optimise the scorecard or decision engine to achieve the best results and minimise errors.

It is also important to keep checking the accuracy of the decision engine even after implementation and regularly update it with new and relevant data sources. The system is then kept up to date and effective.

4. One platform and one flow

Finally, once the data and insights are at your fingertips, it is time to implement a streamlined underwriting process. By using smart automated technologies, such as a single API and decision engine, your organisation can quickly identify attractive customers, assess creditworthiness, and make accurate decisions based on real-time data.

In short, automated lending and risk management processes are essential for any business looking to gain an advantage in a highly competitive market. By choosing the right data and insights provider, using cutting-edge technologies, and adopting best practices, companies can streamline their underwriting process and provide a smooth and efficient experience to their customers.

In addition, when developing innovative solutions, companies should remain vigilant to changing risk factors, such as fraud. Fraudsters are inventive and regularly change their modus operandi. Separately, companies need to offer their customers a unique value proposition to differentiate themselves from other players in the market.

Ultimately, the key to success lies in embracing change and innovation. It means investing in the right tools and partners to meet your customers' needs while achieving your growth goals.