Monday, 5 December 2011

The Five Steps of Instant Decisioning

Banks use instant decisioning during consumer-initiated interactions to determine, in realtime, if a consumer is qualified for an account which they have requested. Instant decisioning is automated, allowing banks eliminate human error and bias. Regardless of the complexity of the decision being made, financial institutions (FIs) use the same basic fives steps for all automated decisions:
Receive applicationsAccess dataTranslate dataRun decision logicPresent the result

In the first step of the decisioning process, the bank receives a consumer application for a financial product. These applications can come through any channel the FI has enabled to receive applications. If it does not come through an electronic channel, a representative of the bank must enter the consumers' information into the decisioning system.

In the second step, FIs pull data to supplement the information provided on the consumer application to determine risk and credit worthiness of a consumer. This information can be internal, from a traditional credit bureau, or from a alternative data provider. Often, third-party providers can be accessed through the instant decisioning platform, requiring FIs to only have one single connection to the platform provider to access multiple data sources. FIs can define what kind of data to pull and in which order to access it, in order to best exercise least-cost routing.

In the third step, the information obtained from external vendors must be translated. The data the FI has obtained is possibly in a different format than their decisioning accepts, so the acquired consumer information is translated into a format that can be used.

In the fourth step, the newly translated data is evaluated against the bank's criteria for a specific financial product. Because the interaction is initiated by the consumer, the consumer credit worthiness is analyzed for one specific product. If the consumer does not qualify for that product, the bank can use the same data to determine if the consumer would qualify for a down sell product (ie. A consumer applies for a platinum card, but does not qualify, so the bank runs their application again and finds them qualified for silver card instead.).

The fifth and final step of the instant decisioning process is delivering the result. If the consumer is approved, the account is booked and the consumer can start using it immediately. If the application is denied, however, the FI has access to why the consumer was not approved and by regulation, must send the consumer a declination letter which includes the reason the consumer was declined for the product. Once the decision is complete, the bank has the capability to store the results and customers' response (yes, no, maybe) in the offers repository. All information from the customer response, application and credit files is stored and can be used later for further customer decisioning and testing for new configurations of logic.

Instant decisioning, regardless of the product, always uses the same five basic steps: the consumer applies, consumer data is obtained, the data is configured to be usable by the institution, the consumer data is decisioned, and the results are presented to the consumer. This process is fast, effective, efficient, and eliminates the bias and error that comes from manual decisioning.

Kelty Wallace is a SEO specialist and copywriter at Zoot Enterprises in Bozeman, Montana.

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