What Does Coronavirus Mean for Online Lending
The coronavirus outbreak currently affecting the world population has concentrated our worries quite rightly on our families and friends. Their health and well-being are paramount. The pandemic not only has an immediate effect on us as individuals and our loved ones but has wider implications for the online lending industry and associated businesses.
Now that governments of the affected regions are taking unprecedented steps to create policies that may limit the spread of the virus, they will also limit many from working their regular jobs. I think we need to address the fact that many workers that do not have the luxury of working from home, taking paid leave, or who simply live paycheck to paycheck may find themselves looking for a loan to try and bridge the financial gap during this time of concern.
Already we have seen airlines cancel flights, sporting events like the NBA, NCAA, WWE Wrestling, limit spectators or postpone games altogether. Music concerts, cruises, business conferences, among others are all being either canceled or, at a minimum, being postponed until the “all-clear” signal is given. This means that the workers that support these functions will also be hit hard, probably harder than most. Hundreds of thousands will be affected, maybe more.
According to a recent Wall Street Journal article, “The 33.6 million U.S. workers with no access to sick leave would face a dilemma should they get sick during the coronavirus epidemic: stay at home and see paychecks shrink, or go to work and create health risks.”
While I acknowledge that this is a trying time for consumers, it will also become more challenging for lenders who need to determine the true intent of those looking for a loan during the application process. The effects of limiting social exposure is going to hit the services industry hard (among others). This will ultimately result in an increase of those that are trying to access credit, whether through Traditional or FinTech means. In times of economic uncertainty, understanding the intention of applicants, especially around 1st party fraud, will become even more critical. The misrepresentation of income and employment, as well as looming bankruptcy, will put lenders at risk.
And, as with all crises of this nature, fraudsters will also be turning their sights on ways to take advantage of the public and the businesses that they rely on. There have already been dozens of new scams documented, preying on the fears and concerns of coronavirus. The Financial Services industry is sure to be one of the top places to target for cybercriminals.
Ultimately, the policies and regulations that FIs have in place are intended to balance risk to the FI, as well as the consumer. Over the next few weeks and months, we are likely to see a significant rise in attempts to “game the system.” This will not only put FIs at risk, but also the consumers who are taking on too much debt.
Neuro-ID’s suite of real-time Neuro Confidence Scores® for risk, leverage next-generation behavioral analytics to reveal and predict the intent of the applicant. Additionally, Neuro-ID’s proprietary Friction Index® measures the health of your digital customer experience, to not only reveal friction in the customer journey to make critical improvements, but also to highlight patterns of fraudulent behavior. Whether increasing visibility into 1st or 3rd party fraud, or monitoring your customer experience, adding a behavioral layer to your risk and CX strategies will provide you with the most holistic picture of your customers available today.