Published on November 9, 2023, 6:59 am
Many financial institutions are facing challenges when trying to transition to more advanced credit models. Outdated system capabilities, limited access to data sources, and inflexible models have led to poorer credit decisioning. This has hindered growth and made it difficult for institutions to navigate the ever-changing credit landscape. However, there is an opportunity for these institutions to leverage data as a solution.
The Asia Pacific region is seeing significant growth in the Business Intelligence segment, with an expected increase of 11% between 2021 and 2028. Financial institutions in Southeast Asia can capitalize on this trend by relying on data to accelerate innovation, provide superior customer experiences, and improve resilience in the face of market volatility.
It’s no surprise that Banking and Financial Services account for the largest chunk of Big Data spending in Asia Pacific, with a CAGR of 15.4% between 2019 and 2024. As a result, there is a growing trend of platforms offering Data-as-a-Service (DaaS) to the financial sector. DaaS enables financial institutions to solve business challenges and tap into previously obscure markets by leveraging transactional data. Efforts are underway to bank the unbanked in Southeast Asia through improved credit decisioning and financial inclusivity.
DaaS Marketplaces have emerged as platforms where financial institutions can converge and consolidate various data sources into one hub. These marketplaces provide easy access to traditional fraud, credit, identity, open banking, and alternative data. The availability of local, regional, and global data brings providers together and opens up cross-border opportunities that were once limited to only a few players.
By simply selecting specific data sources through a single API in a data cloud platform, rich customized datasets can be created. This enhances businesses’ ability to make data-driven decisions without the need for systems integration or tedious maintenance tasks. Internal development resources can be freed up for more crucial projects.
As technology continues to advance, this process can be further automated, allowing businesses to offer customized and personalized offerings to their visitors in mere seconds. This takes credit decisioning to the next level, enabling financial institutions to reach more business segments in more countries, all within a shorter timeframe.
Access to such powerful tools helps companies build a wider portfolio of products and services and deliver superior customer experiences in less time. Data ecosystems offered by DaaS Marketplaces also contribute to greater accuracy in risk decisioning, addressing a prevalent challenge in the industry. Currently, only 18% of fintechs and financial services organizations believe their credit risk models are highly accurate.
By gaining access to more data from DaaS Marketplaces, companies can move away from antiquated credit models and expand into new segments and markets. A seamless, frictionless, and fully automated decisioning process adds value for clients while minimizing risks. In today’s age of disruption, this enables businesses to disrupt rather than be disrupted.
In conclusion, leveraging Data-as-a-Service can transform financial institutions by empowering them with advanced credit decisioning capabilities using rich datasets sourced from various providers. This enables accelerated innovation, superior customer experiences, and improved resilience. The growing availability of data within the Asia Pacific region presents an opportunity for financial institutions to tap into previously untapped markets and business segments. By embracing data-driven strategies through DaaS Marketplaces, institutions can drive growth and stay competitive in today’s ever-evolving credit landscape.