The Evolution of Responsible Lending: How Serene Adds a New Dimension
Responsible lending has evolved from basic assessments of creditworthiness to today’s focus on affordability and customer outcomes. The financial industry has adapted to meet the growing needs of consumers and regulators. As the landscape continues to shift, so too must the tools we use.
Serene represents the next leap forward, introducing a proactive and predictive approach to lending. Our unique data source harnesses unparalleled predictive power, helping lenders look beyond the past to ensure better outcomes for both customers and firms.
Dimension 1: The Past - Creditworthiness
In the early days of lending, decisions were often based on relationships, reputation, and limited data about a customer’s past. These methods were subjective and inconsistent, leading to errors and bias. The introduction of credit scores revolutionised the process, providing a standardised way to evaluate a borrower’s historical behaviour.
However, credit scores have a key limitation: they are backward-looking, relying solely on past performance without accounting for future potential or emerging risks.
Dimension 2: The Present - Affordability Assessments
Affordability assessments provide a more holistic view of customers’ financial situations. With increasing regulatory pressure, particularly the FCA’s Consumer Duty, lenders must not only assess affordability but ensure customers can meet their commitments without falling into financial difficulty.
While affordability assessments are a critical improvement over historical credit scores, they are static and struggle to account for life changes or future vulnerabilities.
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Dimension 3: The Future - Serene’s Predictive Power
Serene introduces a new dimension by overlaying vulnerability detection and predictive insights onto existing credit and affordability measures. By combining historical data, affordability checks, behaviour insights, and advanced predictive analytics, Serene provides a forward-looking view that anticipates customer outcomes.
This proactive approach enables lenders to better align with evolving regulatory expectations, mitigate risks, and enhance customer trust.
Proof in Practice: Proven Value with a Leading Alternative Lender
We recently completed a successful proof of concept with a leading alternative lender, demonstrating how Serene’s predictive insights have the potential to drive better customer outcomes. Stay tuned for the final results next week, where we’ll reveal how our approach is enabling firms to unlock tangible benefits, including:
As the financial services sector grapples with the complexities of affordability and vulnerability, Serene brings clarity and confidence. By shifting from reactive to proactive measures, we help lenders make more informed, forward-thinking decisions.
Stay tuned for our case study next week ??