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Advances in Data and FI’s

Post Categories: Blog

By: Matt Lyman, Senior Marketing Manager


In February, The Green Sheet published “Advances in Data, Automation Speed FI Merchant Boarding” by Matt Ward-Steinman, G2’s VP of Solutions Development.

In this article, Matt discusses the recent renaissance with underwriting and boarding merchants, and how the ability to make quick decisions and streamline the boarding of new merchants is becoming a must. He suggests that FIs (financial institutions) take a step back and rethink their current boarding practice. Innovative approaches – especially automation, the use of data, and continuous underwriting – are necessary in order to continue to grow and nurture the diversity of their business portfolio, while taking calculated risks.

Matt further explains the need for this innovation:

Online applications, fast enrollment and continuous underwriting – innovations once exclusive to the servicing of micro-merchants – are finding their way up-market to small and midsize businesses. As merchants demand faster decisioning and competitive rates from their banking partners, FIs are increasingly challenged to reduce costs and application processing time.

To pick up the processing pace, some acquirers are revising underwriting workflows with technology and data sources that meet several requirements, including:

Data delivery via API. APIs are computer-to-computer requests, responses and automated communication. The client typically “calls” the vendor’s application, which then transmits the results.
Fast response times. Underwriting is approaching near real-time information, often measured in seconds instead of minutes or days.
Relevancy. Data that is relevant is applicable and inclusive of the applicant pool.
Predictive value. Models based on data science generate a score or probability that a meaningful future event, such as merchant fraud, will occur.
Online Applications. Self-serve forms enable a merchant to apply for an account electronically.

In addition to ensuring that the merchant doesn’t later engage in illegal or noncompliant activity for which the FI bears liability, the process of continuous underwriting also enables the FI to offer more favorable terms if the risk profile has changed, retaining a customer that might otherwise have left for a competitor.

Matt also references a recent case study that found that by enhancing its process, a European PSP was able to decrease the time needed to review 3,000 new merchant applications by 93 percent, while still maintaining current acceptance levels. The PSP was able to accomplish this by being proactive about innovation and taking part in this renaissance. Using automation and APIs, efficiency increased and their portfolio continued to flourish. Read more about this case study here>>

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