An Earnix & SourceMedia / American Banker survey of bankers uncovers what makes pricing specialists three times more confident in their predictions

Using Advanced Analytics to Predict Consumer Behavior and Optimize Consumer Loan Strategies:

The consumer lending industry is going through a technological turning point in this era of rapidly advancing computing power, interest rates that are rising but still low, and intense competition for modest growth. A cadre of pioneering lenders is deploying powerful analytics to model consumer behavior and optimize pricing and risk management, moving far beyond longstanding tactics like calibrating against rates posted by other banks. Such tools are giving these banks the confidence to pursue growth that some competitors don’t recognize is available, and opening up a gap between lenders with fine-grained, actionable intelligence on their clientele and those making due with the clumsy intuitions afforded by conventional practices.

A recent SourceMedia Research/American Banker survey of senior bankers revealed clear results:  Lenders that use advanced demand analytics to align pricing to bank goals — the key to optimizing margin and volume — are able to develop higher portfolio growth targets, and express more confidence about their ability to manage risk and performance. In the home equity business, high-tech lenders are three times more likely to say they are very confident in their ability to predict and manage risk and profitability than less sophisticated counterparts.