Behavioral Data: New Tool for Lenders

One of the most prominent name in UK’s credit card industry & an apex body APACS, made an important announcement to introduce major enhancement towards establishing data sharing processes. This announcement was made on behalf of credit card industry...

The APACS members will share ‘behavioral data’ of the customers they are currently giving service, as per spokesperson from APACS...

For this new project APACS has got promises from its core committee members for better execution of the work... This is the initiative taken by five major credit card issuers’ which are- 1.Barclaycard, 2. Capital One, 3.GE Money, 4.HBOS and 5. MBNA. Starting with this month, theses five credit card issuers will share the data. After discussing different issues with their IT executives, Other Credit card issuers will soon follow this trend. Main aspect of this project is to find data of those people who are going through the financial crisis, With this new scheme credit card companies will be able to fulfill their long term commitment towards good lending practices as per the banking Code, which will come into effect by March this year.

General practice is that before lending to any person his previous credit history, bank statement, current asset values, address proofs all are verified through a third party investigation. Through this new initiative data relating to their last payment made towards credit card were really equivalent to the minimum payment or not can be verified. Changes to credit limits; extend to which they withdraw cash on their checking account and if the customer is signed up to any promotional deals. Specifically, last category is important as it helps a lender to differentiate between the customers who have good payment tracks & have been paying the minimum amount due to him. Because of financial difficulties and current market conditions customers who can repay but is avoiding to do so because of the bad deals they have obtained. This data-sharing scheme will help the lenders to have full and perfect information of their customers’ credit card usage. This will definitely help the lending industry in coming years for commitment towards responsible lending for better future services. This new data sharing system will allow credit card issuers to manage their customers’ account with good tracking and in deciding before lending to those who are already deeply caught with their old debts. This will allow lending industry to help their customers in early stages so that further consequences can be avoided.

The Holy Grail for credit card companies was to have access to data that could predict a customer’s future ability to repay back their liabilities comments Paul Rodford, APACS' Head of Card Payments.. At an earlier stage it, for those was showing signs of debt stress’ and by ensuring that those had already been struggling are not given further credit.

But it is a significant step that had taken in the card industry’s ongoing commitment to responsible lending. It took a great deal of work and investment to achieve and that should bring real benefits for the consumer.

“We welcome the news that this important enhancement to data sharing is now launched and it is their personal believes that customers who are showing signs of experiencing debt stress are identified at an early stage, so that appropriate help can be provided. Confirms,” Peter Tutton, Senior Policy Officer, Citizens Advice. It is now essential that lenders make full use of this extra information as part of an ongoing commitment to responsible lending.

APACS has revised its consumer guide and explained how behavioral data will now be available on their credit report with this announcement, which sets out the information held on a credit report by the credit reference agencies and explains why it is important for consumers to keep their credit records.

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