Here’s why PurplePatch should be part of your credit data purchasing process

For decades, a lack of transparency has made it challenging for procurement and credit risk managers to easily compare pricing for credit data. Credit bureaus often take advantage of this ambiguity and lock credit providers into lengthy contracts that focus on bundled packages.

It shouldn’t be like this.

Now, more than ever, credit providers want flexibility in contracts, and with multi-bureau options to fill gaps in credit data information and to not pay more than their competitors.

And that’s exactly why co-founders Nick Green and Nick Frazer set up PurplePatch: to ensure fair pricing and the best quality credit data for lenders' credit risk programmes.

“Having worked in the industry for 60 years+ between us, we knew there was a lack of transparency in terms of pricing and thought it unfair one customer could be charged as much as 1,500% more than another for the same products and spend footprint.” - Nick Frazer.

In this ultimate guide, we explore how PurplePatch is supporting credit providers and helping to save on average 25-40% on costs alone, plus enabling them to gain flexibility...

?? But first, take a quick look at this flipbook to find out a little more about the Nicks and why they set up PurplePatch in this flipbook: Meet the team.

How Purplepatch works with risk, compliance and procurement teams

“Comparing credit risk data to get the best price and quality is somewhat of a nightmare and reminds me of the days before comparison websites for items like car insurance. Unfortunately, there isn’t such a thing for credit risk data yet - but there is our support.” - Nick Frazer.

Whether your bureau contract is up for renewal, or you want to renegotiate a better deal mid-term, there are ways to successfully negotiate cost savings.

The 3 key elements of a good price negotiation

●??????See a benchmark of what you’re paying against industry norms - Benchmarks create leverage by comparing prices being charged to your competitors, across the entire market (and also usage flexibility that is built-in to their contracts which fundamentally helps save money).

??Top tip: We recommend gaining a broader view of UK and overseas credit bureaux to compare and find the right solution for your credit risk programs.

●??????Build a shortlist of alternatives - So that you can walk away from an unappealing deal (one with a data supplier that fits your needs just as much).

??Top tip: We’ve found some credit providers have better SLA’s than others, so it’s always worth revisiting these to make sure they are fit for purpose.

●??????Carefully negotiate - Armed with benchmarking insight, you can negotiate more effective agreements.

??Top tip: Don’t fall into the trap of lock-in where large and complex agreements can seem heavily discounted but may not be suitable for today’s uncertain climate.

Even if you have a preferred supplier, to lower credit bureau prices and to negotiate a fairer deal, we recommend data benchmarking for leverage.

??Further reading: The ultimate guide - How to get the best-priced credit data.

How PurplePatch breaks down better data quality and price barriers

There are several key barriers that procurement teams face:

1. Lack of transparency - Very niche and complicated market with no published pricing.
2. Difficulty comparing products - So many different products (including bespoke solutions) make it near impossible to compare like-for-like. Or, argue commodity pricing.
3. Often, only able to compete against their own previous years' quotes - And not what others are paying right now for the same package/footprint of data. So, if they paid 25-40% more than the market value in 2017, a 10% reduction in 2020 seems like a good deal.
4. Cost of change - It can be costly to switch credit bureaux. This allows the CRA's to hold high pricing.
5. Strong internal stakeholder relationships with the bureau - Procurement may find it difficult when Risk Managers have strong relationships with the CRA’s and do not want to disturb the relationship. This can result in no leverage on pricing.

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How we break down these barriers

Creating complete transparency and showing you what is available on the market and the prices others are paying, we can support you in two ways:

[Phase 1: FREE proof-of-concept data benchmarking exercise]

Behind the scenes, we support by:

●??????Providing pricing benchmarks - for free (and under NDA)

●??????Identifying inflated charging

●??????Pinpointing low hanging fruit

●??????Providing a view on potential savings

●??????Identifying strategic decisions that could be considered

[Phase 2]

Once we’ve highlighted cost savings and you choose to instruct us, we provide:

●??????Target pricing for each search and product

●??????Strategies to reduce reliance and costs

●??????Additional data sources to be considered

●??????View on the licence, hosting and maintenance fees

●??????Under-usage identified and monetised

●??????Beneficial commercial terms to mirror

●??????Advice at each iteration of negotiations

●??????Present proof of pricing (if necessary)

●??????An approach that offers high potential savings more rapidly than going to RFP

???Take a look at our flipbook for: How PurplePatch compliments procurement teams.

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What you can do, without PurplePatch, to negotiate the best price and quality data

There are several key things you can do right now to get better priced, better quality credit risk data. Even if you intend to use the same provider, it's worth running this exercise to improve your current terms:

• Review data contracts now (even mid-term) to see if you are making full use of the terms/number of searches and to identify gaps in credit data.
• Run an RFP process and ask at least five data and decision solution providers - the more, the better - to quote on your new credit risk data needs, giving them a set clear criteria that can be compared across the suppliers.
• Leverage your findings to renegotiate with your existing supplier.
• Consider alternative suppliers or moving to a dual bureau approach for added flexibility and create a champion challenger scenario for future negotiations.

??For further guidance with contract negotiation, take a look at our ultimate guide: How to successfully negotiate better terms with the bureaux.

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Case studies: Credit data benchmarking in action

On average, lenders save c.25%-40% on costs by working with PurplePatch.

?Here are some recent cost-saving examples…

?●??????Finance Customer (Consumer): ￡750,000 saving over 3 years (25%)

●??????Retail Customer (Consumer): ￡3,000,000 saving over 5 years (23%)

●??????Motor Finance Customer (Consumer): ￡112,000 saving over 2 years (58%)

●??????Banking Customer Global (Consumer): ￡1,500,000 saving over 2 years (43%)

●??????Energy Customer (Commercial): ￡50,000 saving over 1 year (27.5%)

●??????Finance Customer Global (Commercial): ￡255,000 saving over 3 years (66.6%)

●??????Oil Company Global (Commercial): ￡6,000,000 saving over 3 years (50%)

●??????Brewery UK (Commercial): ￡120,000 saving over 3 years (50%)

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Why PurplePatch is popular amongst credit providers right now

To gain cost efficiencies

“There’s always been the demand for our services because of the lack of transparency in the credit market and difficulty comparing products and ensuring they get a fair price - but few credit providers knew we existed. Recently, the need for cost reductions and an increase in awareness that clients are being over-charged and want to sense-check pricing.”- Nick Green.

Moreover, given the volatile market, the effectiveness and deterioration of scorecards prompted credit risk managers and procurement teams to seek flexibility in contracts - something that bureaus have only just started to implement. This enables the credit provider to utilise multiple suppliers for bureau data, fraud solutions and decision platforms and still benefit from the best market rates, whilst utilising the best scorecards.

To gain contract flexibility?

A lot of contracts are not flexible enough to accommodate for usage variances at the same time as agreeing to preferential unit costs. Improved datasets and scoring models are available from new entrants who have risen to the challenge and are leaving behind the main credit bureaux in terms of fraud prevention and scoring accuracy.

??Myth buster: You do not need to wait until the end of your contract to negotiate more favourable terms. You can do it mid-term.

Today's credit providers are finding it more and more difficult to negotiate "static" agreements that withstand the pressure of change. At the time when many contracts were negotiated, Covid-19 was not around.

"Following the pandemic, volumes of searches were lower and underutilised, thus costly. Which triggered lenders to look at renegotiating terms to decrease costs. Now, credit providers expect this flexibility to be embedded into contracts to allow them to adapt. We've actually recently seen bureaux give discounts and refunds to credit providers already tied into a contract." - Nick Green

??Take a look at this article in Finextra to find out more about mid-contract negotiation.

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Frequently asked questions

Q. How do you get all the market information to prepare quality and price comparisons - in the UK and overseas?

Working with clients under NDA, we have conducted hundreds of data benchmarking exercises and therefore built an extensive database of price points. Feedback on data quality, coverage and price from clients across all sectors are invaluable when advising others.

Q. Why do you offer a free benchmarking assessment? And what’s included in this?

This approach is really popular with our clients as there is little work required from them and the feedback they receive will either give the stamp of approval on pricing or highlight areas where savings can be made.

Q. Are you an accredited third-party?

PurplePatch renews its Hellios FSQS stage 2 qualification annually. This accreditation is a benchmark used by major banks and financial institutions when selecting suppliers, helping to mitigate third-party risk and adhere to regulatory requirements.

??Find out more in this article in Credit Connect: PurplePatch renews supplier accreditation with Hellios.

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Your next steps

Fundamentally, if you don’t know that your competitors are paying a lot less than you, you won’t have the knowledge or confidence to challenge bureaux prices.

And you are not alone - the majority of the market is plagued with this ambiguity and complexity of comparing which is driving high prices, making it difficult to switch providers - or negotiate better rates with the same provider (even mid-contract).

But there is a solution: data benchmarking.

Access the unique solution today - it’s FREE

No one else offers the data benchmarking service that PurplePatch can support you with, saving credit providers on average 25-40%. If you would like to get your FREE initial data quality and price benchmarking assessment, get in touch.

Email: [email protected]. Or call: 07414 150001.

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