The tech that’s increasing revenue for lenders and loan providers

Number Intelligence was launched by Honey Badger in early 2023.

But what does it do exactly? And why is it fast becoming an essential piece of technology for lenders and loan providers?

As the name (hopefully) implies, it provides intelligence on phone numbers. Intelligence in this case being in the form of risk insights. ‘What kind of risk insights?’ I hear you ponder. Well, before we go down the risk rabbit hole let’s first consider the challenges faced by lenders.

Whether it’s consumer vs business finance or credit vs a loan, there’s usually two things top of mind for every lender:

1. Making sure that finance isn’t given to those that won’t repay.

2. Making sure that people who will repay aren’t denied finance.

   
   

What do these two things have in common? They both impact a lenders revenue. When finance isn’t repaid revenue is lost and expenses are increased. When good borrowers are turned away revenue opportunity is lost.

Is there anything more tragic than lost revenue opportunity?

OK maybe… but for lenders it’s kind of a big deal.

Now if we take these two objectives and break them down a little further, there’s three challenges that lenders are up against:

Challenge #1 – Fraud Risk

It should come as no surprise that lenders are a high target for fraudsters. These bad actors submit applications without having the intention of ever repaying. They’ll take money and disappear into the abyss never to be seen again. Thus challenge 1 is determining if an application is fraudulent.

Challenge #2 – Credit Risk

So, an application isn’t fraudulent? That’s good. But it still doesn’t mean they will repay despite their best intentions. Challenge 2 is therefore to determine whether an applicant has the means (and will) to repay. Credit history can be a good indicator but is often trumped by an individual’s current financial or personal situation.

Challenge #3 – Customer Friction

Finally, we arrive at challenge 3. This is what makes or breaks a lender. It’s essentially how to tackle challenges 1 and 2 without causing so much friction that the applicant drops out or abandons. The stats are staggering with dropouts as high as 60% when excess burden is put on the applicant, such as requesting they upload supporting documents. In the extremely competitive lending space having the right balance between reducing risk and customer friction determines whether you’re a winner or loser.

Enough about the challenges, let’s talk solutions…

With these challenges in mind, let’s dig deeper into Number Intelligence. First and foremost, it’s a pay per lookup service that instantly and silently performs a bunch of checks. During a finance application or onboarding process lenders will typically use Number Intelligence to:

• Check if the applicant’s number is on a high risk or known fraud database submitted to Honey Badger by network operators, government regulators, industry bodies or by the public. Since Honey Badger is the official provider of the Telecommunication UK Fraud Forum high risk number platform, we have unique real-time insights on trending numbers.

• Check for fraud indicators such as if an applicant’s mobile device is currently overseas, if call forwarding is setup or if the SIM has recently been swapped.

• Perform a silent KYC check against the information held on file by mobile network operators. This incredibly powerful feature allows lenders to leverage a KYC check that has previously been performed by a network carrier. Number Intelligence will verify that an applicant’s first name, last name, postcode and/or data of birth matches the information stored on file by the mobile network operator. A mismatch indicates something clearly isn’t quite right.

• Get information such as the applicant’s mobile network operator and their line type (prepaid vs pay monthly vs business).

Why do lenders and loan providers this approach? Because all the above checks are performed with absolutely no customer friction. Yes that’s right, zero customer friction.

Furthermore, they directly address the challenges we outlined earlier. Lenders can check for fraud risks and can check the applicant is who they claim to be. Ultimately, this means that lenders can streamline borrowers through the application and onboarding process when everything checks out, and all signs point to go. When, and only when, a flag is raised by Number Intelligence do lenders need to revert to additional checks and processes such as verifying documents uploaded by the applicant.

Smart lenders know that onboarding good borrowers as quickly and efficiently as possible is what really moves the revenue needle. They focus on quickly identifying good borrowers then removing the hurdles that cause friction and lead to application dropouts or abandonment.

But that’s just the beginning. How does Number Intelligence factor into credit risk? Our most innovative customers are using the information returned by Number Intelligence to inform their credit risk models.

Have you ever considered questions such as:

• Do people on pay monthly mobile contracts make better borrowers than those on prepaid?

• How do loan default rates differ between people on Tesco Mobile vs Vodafone vs Three vs others?

We have, and so have the innovative lenders we work with. That’s why they’re using Number Intelligence and reaping the benefits.

Stay tuned to the Badger Blog for future insights on how Number Intelligence influences credit risk models.