19 May 2021: Sydney, Australia: Leading data and analytics business illion has accelerated the rollout of open banking in Australia with the launch of an innovative new transaction score.
illion’s data scientists have unlocked new insights into consumers’ credit risk behaviour, based on key trends from income and expense transactions that have traditionally been hidden.
“In a post-COVID world, this is the game changer that the market has been looking for – a more sharply focused lens which gives decision makers a clearer picture than they have had before,” said Simon Bligh, CEO of illion.
“There are upsides for consumers as well as credit providers, with the key insights needed to unlock more tailored lending terms and conditions and a broader range of products through enhanced credit underwriting and more suitable loan pricing.
“This is good for financial institutions who can price more efficiently, lend more responsibly and do so at lower cost, and it is good for consumers who will have an expanded choice and get the products that are right for them, quickly. It’s one of those rare innovations where everybody wins.
“Our modelling also shows that for personal loans, lenders can increase their portfolio profits by 20%, considerably reduce risk, and have happier customers.
“Banks and credit providers hold a raft of data that shows both the financial state and spending behaviour of their customers. What the score does is mine this data and make sense out of it in a straightforward manner.
“An example of an insight we have developed is that there is a strong correlation between an individual’s risk and the amount of their salary they pull out of the ATM on pay day. We have developed thousands of these insights,” said Mr Bligh.
While this data offers the capability to understand spending behaviour, most credit providers have made limited use of it for this purpose. For example, it has rarely been used to understand a consumer’s propensity to modify consumption habits in-line with their economic wellbeing.
Furthermore, by their nature, smaller banks have traditionally had limited access to transaction information, as they have generally held a secondary relationship with the consumer. This has disadvantaged them when competing with Tier 1 banking institutions for prime borrowers.
“Developing Transaction Scores requires both a technical understanding of banking data structures as well as a deep knowledge of spending and broader consumption behaviour. illion coded and analysed more than 1,000 business-interpretable transaction data features, then used a combination of traditional modelling and Machine Learning techniques to develop the illion Transaction Risk Score.
“This is cutting edge analytics that very few companies are doing anywhere in the world,” said Mr Bligh.
About the illion Transaction Risk Score (iTRS)
illion has a market-leading position in Australia in bank transaction categorisation, risk analytics and bureau services, meaning that it is ideally placed to develop a scalable Transaction Scoring service that is economically valuable for all credit providers.
The illion Transaction Risk Scores (iTRS) are built using many of the same robust analytical techniques that are used in illion’s consumer credit ratings. The features that drive the iTRS have been hand-crafted using more than one billion banking transactions from more than 2.5 million account holders and 160 institutions.
If you would like any further information about the illion Transaction Risk Score, please contact us.