Quality Leads and Speedy Transactions: How Non-PII Data Boosts Online Lending

March 2, 2018         By: Tom Donlea

As online lenders look to expand their market reach, they’ve increasingly turned towards a segment of borrowers that has had a hard time getting loans from traditional banks. These so called “thin-file” customers – those with limited or no credit history – number nearly 64 million in the U.S. alone. That’s nearly one fifth of the population so it’s no wonder they have become popular as the online lending market surges to a projected $350 billion by 2025.

For loan originators, verifying the identity of these borrowers (and reducing the risk of fraud) is inherently more difficult because of the very lack of information that makes them less attractive to traditional banks. At the same time, with so many lenders now competing for their business, these customers have the luxury of choice. And many care more about the speed of the application and approval process than they do about getting the lowest interest rate. So how can lenders balance the need for identity verification with the desire to meet the demands of an increasingly real-time marketplace?

It starts at the top of the funnel. Lenders have implemented Loan Management Systems to speed up the underwriting process. Most perform basic checks when purchasing leads from ping tree marketplaces; they verify that they can provide a loan in given state, conduct velocity checks to prevent loan stacking and compare leads to blacklists of known bad actors. They also rely on alternative credit bureaus (like Clarity and Factor Trust) that look at things like the borrower’s payment history with cell phone, utility and other providers. While necessary, these sorts of checks don’t say enough about the quality of the lead or the likelihood that a real, contactable customer submitted the application.

But non-personally identifiable information (non-PII) data can give lenders a much more predictive indicator of the quality of leads (and root out potential fraud) at the top of the funnel. By comparing the non-PII signals from leads to those of their best performing customers, lenders can both improve the quality of leads they acquire and hasten the approval process for legitimate applications.

Positive signals include things like:

  •       an email address age of more than 720 days
  •       an IP address within 10 miles of the physical address
  •       a match between phone and address
  •       a match between email and name
  •       a match between phone and name
  •       a match between address and name

And in the never-ending war against fraudsters, non-PII data can also provide a warning that an applicant is using a tactic like synthetic identity theft (combining real and fake identity details to escape detection). Being able to quickly distinguish between a real customer and a fraudster not only speeds up the transaction, but reduces the chance that a good customer is made to wait or, worse, has their transaction rejected.

Some common risk signals include:

  •       a mismatch between linked email, phone or address details
  •       an email address less than 90 days old
  •       a non-fixed VoIP or toll free phone number
  •       a phone country code and physical address mismatch
  •       invalid phone, email or address info
  •       a proxy IP address

Non-PII data (and the linkages between data elements) applied at the top of the funnel can give online lenders a distinct advantage and improve the experience (and most importantly) the speed of the customer transaction. That can mean the difference between a customer won and a customer lost.

About Tom: Tom Donlea leads the global marketing efforts of Whitepages Pro, the definitive identity verification data provider for risk management in banking and online lending worldwide. With over ten years of online payments and risk experience, Tom previously was the founding Executive Director of the Merchant Risk Council.