Why we need real-time data in a post-pandemic world

What has the outbreak of Covid-19 taught us about the importance of real-time data?

There are many lessons that have emerged from the outbreak of the pandemic. A new reliance on all things digital, the importance of connectivity, and the overall shift to our way of life that comes with accepting these new means of shopping and running businesses. But perhaps one of the biggest lessons the finance sector has had to learn is the importance of real-time data.

Historically, lenders have relied on traditional credit scoring and static business information supplied by credit bureaus to inform decisions on funding applications. However, the pandemic exposed the problems caused by this overreliance on one-dimensional and often out-of-date data when it comes to determining the creditworthiness of a business. In truth, much of this data became antiquated – even useless – over night when the pandemic hit. 

Although industries are looking ahead to brighter futures with the economic recovery improving, a large amount of uncertainty remains. Goal posts continue to be moved at such a rapid rate, that access to real-time and contributed data is now the only way to authentically understand an SMB’s needs.

Why is real-time data so important?

One obvious reason as to why real-time data is becoming so necessary in the future of business is speed. Financial service providers will always want to know more about their customers and to find new ways to be more efficient. When utilised correctly, real-time data offers this ability – and quickly. This means lenders, in particular, can make faster and smarter decisions, rather than potentially missing vital trends and information. And in these modern times, no one can risk being left behind.  

Research shows that customers are pickier than ever, with a third of UK customers confirming they would part ways with a company after just one poor experience. While 90% would jump ship after just two to five poor interactions with customer service. Harsh? Perhaps, but no less true. 

Real-time data is already proving to have an impact on decision making and overall customer experience across all industries. By cutting down time a SMB spends inputting information and ensuring decision making is more accurate, financial service providers can attract and retain more customers.

By providing lenders with access to the systems SMBs use to run their businesses everyday, business owners can access fairer products and pricing that reflects their current financial position. Real-time data can also be used to develop solutions that help SMBs better manage their cash flow and budgets. 

Lenders themselves can utilise real-time accounting, banking, and commerce data to inform credit-scoring methodologies and identify cross-selling opportunities. Affordability checks can also ensure lenders are able to continually and confidently manage credit risk effectively. As a result, they can reduce operational costs, minimize bad debt, and lower churn. 

Codat in action

Experian’s Commercial Acumen product is just one of many powered by Codat’s API. Experian Commercial Acumen combines multiple data sources into a single detailed view of a customer that helps lenders reduce risk, increase revenue, and create competitive advantage.

Prior to working with Codat, Experian recognised lenders were often bogged down and misdirected as a result of an over reliance on annual account information that did not accurately reflect the current profitability or expenditure of their small business customers. This resulted in lengthy application processes and prevented small businesses from accessing the tailored relationship management services they deserved. 

By teaming up with Codat, Experian is able to offer lenders a product that makes loan applications quicker and simpler for everybody. By directly accessing the financial systems their customers use everyday, lenders are able to gain a more in-depth insight into the financial health of each business which they can use to make faster and fairer lending decisions, offer bespoke products, and provide useful advice on repayment options. 

“Experian’s mission is to make it easier for small businesses to gain access to finance and also to build a deeper and richer understanding between SMBs and lenders to better serve SMB needs in perpetuity. We do this by digitising the lending journey which reduces the time taken for a small business to get funds and lowers the processing cost for lenders. Codat is an integral part of this solution which allows lenders to get a holistic financial profile of a small business in a matter of minutes rather than days.”

Gareth Rees, Product Director at Experian 

If you would like to learn more about how Codat could help, please feel free to contact [email protected] or start your free trial today.