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Tech-driven credit management solutions are key for businesses in post-Covid world, says new report

Published Wed, Jul 14, 2021 · 12:03 AM

WHILE some consumers have suffered a decline in household incomes since Covid-19 hit, others from the highest income brackets have reported the opposite, giving rise to a complex dual economy, and forcing changes in the lending and credit landscape, says a new report.

The Experian's 2021 Global Decisioning Report also noted that as the pandemic brought more consumers online for transactions, expectations have risen. More than half (55 per cent) of consumers said they have higher expectations of their digital experience since the pandemic began.

To help navigate this increasingly complex financial landscape, technology-driven credit-risk management solutions are rising in importance, said the report.

Since the start of the Covid-19 pandemic, Experian's data shows that banks and financial institutions across the Asia-Pacific have charted a 74 per cent rise in number of loan applications. This increase, in conjunction with the changing credit landscape, has nudged 63 per cent of Asia-Pacific businesses to express concern about their customers' credit worthiness, as broader economic uncertainties impact customer behaviour.

The report found, for example, that in purchasing of goods and services online, only a third of the respondents in the Asia-Pacific surveyed were willing to wait up to 30 seconds before they abandon the transaction; and one in four consumers have taken their business elsewhere because their digital needs were unmet.

The report thus stressed the need for businesses to "transform their operations for digital decisioning in order to reach customers in real-time with the most relevant and contextual offers".

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One way for businesses to rise above the challenge is to rethink their analytic models, the report said, given that confidence in these models (which help them predict consumer behaviour, for example) suffered a dip during the pandemic.

The report also noted a greater expectation among consumers to apply for credit whenever and wherever they want - and they are willing to provide additional personal data for it.

New payment methods like Buy Now Pay Later (BNPL) are emerging as a key trend among younger consumers, with nearly a third (27 per cent) of consumers using BNPL to make purchases. The report said these consumers "do not view BNPL as debt, and want a method to spread out payments over time".

Businesses can tap into the opportunities that the emerging BNPL consumer market presents by addressing consumers' needs and providing increased payment flexibility.

One thing is for sure, said the report - consumers have growing digital needs, and businesses will have to adapt.

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