The Visibility Gap: Why are Banks Struggling to See the Full Picture?

Banks are under growing pressure to make faster, more accurate credit decisions, whilst managing risk exposure and improving customer outcomes.

Why?

There are several competing factors at play here:

• Customer expectations are ever more demanding – businesses expect instant decisions, a fast approval process, slick onboarding, and personalised solutions tailored to their financial profile and business needs.
• Fintech and digital challengers built with AI, machine learning, and robotic process automation are increasingly stealing market share thanks to fast, data-driven decision making.
• Regulatory pressure to avoid over exposure to credit risks, ensure the best possible customer outcomes, and drive a fairer lending ecosystem is intense especially in such an uncertain global economic environment.
• Over reliance on manual lending processes is not only hitting the bottom line hard in terms of labour costs and slower time to value, but increasing the risk of inaccuracy and customer churn.

To help banks get ahead of the curve of the broad challenges they face in commercial lending, FullCircl recently launched ProBanker. ProBanker delivers real-time visibility into commercial credit risk exposure, affordability, and liquidity across the entire UK lending market.

Here we explain why banks need this, why now, and what increased credit visibility means both for banks and their commercial customers.

What is the cost of incomplete credit visibility?

The backdrop for commercial lending - with changes in employers’ national insurance, trade tariffs, labour costs, and business rates – is challenging.  

More businesses are seeking funding than ever - it’s predicted that by 2030 the UK SME sector alone will require finance to the tune of £70 billion+. But demand is not always being met by banks.  

Without complete credit visibility banks are unable to fully understand customer needs and spot opportunities for growth.

One of those opportunities is the potential revenue from rejected applications. There are over 5.5 million SMEs in the UK, and around 30% of these have sought finance during the last three years, according to The British Business Bank. This equates to approximately 1.7 million businesses. Shockingly, not only is access to funding difficult, but over 50% of SMEs whose applications are declined do not seek alternative lenders.  

Additionally with limited visibility into a customer’s total financial exposure - outstanding debts, affordability, and liquidity – banks are left open to blind spots in risk assessment. Indeed a recent case study, documented that a tier 1 bank uncovered a £350m exposure to businesses struggling to meet repayments on debts. Risk management is a pillar of successful lending and regulatory compliance, it's therefore vital that banks have a clear picture of customer behaviour and creditworthiness to mitigate risks across their entire lending portfolio.

Finally, the cost of a poor customer experience. According to FullCircl’s own research 38% of customers have abandoned account opening – much higher than banks anticipate. In fact, 98% grossly misjudge levels of drop-off. Without complete credit visibility banks cannot personalise lending strategies for commercial customers, onboard them as quickly and compliantly, or gain a total 360-degree view of evolving behaviours and needs to ensure retention and growth of their lending portfolio.

The problem of multi-banking

70% of UK business are multi-banked, add to that the increased risks associated with economic uncertainty and it’s easy to see how pockets of hidden risks are being created leaving banks exposed when it comes to their lending strategy:

• Reduced Visibility into Total Exposure: When a business has a range of funding solutions spread across several banks and alternative finding providers, each only has a fragmented picture of risk and may not therefore understand the full extent of affordability and suitability.
• Delayed decision making: With fragmented and incomplete data and insight it is hard for banks to assess creditworthiness and affordability, therefore slowing down decision making. This increases time to funding for customers, as well as time to value for banks.
• Missed opportunities: As mentioned without a complete view banks cannot spot funding gaps or evolving customer needs meaning businesses - particularly SMEs - are underserved and banks limit opportunities for growth.
• Greater risk: When banks have blind spots because of insufficient data or a lack of visibility it hinders their ability to accurately assess and mitigate risks, leaving them open to penalties for regulatory non-compliance.

How can FullCircl ProBanker help?

ProBanker, developed in partnership with Experian, is uniquely designed to empower banks with a total view of customer indebtedness, affordability, and credit risk across multiple lenders – helping them proactively manage risk, unlock lending opportunities, and deliver better financial solutions.

Total visibility features include:

• Cash positions: Cash balances, inflows, outflows, and rejected payments for enhanced ability to assess liquidity and financial performance.
• Product profile: Breakdown of outstanding debt across various credit products and insight into how businesses manage their borrowing.
• Credit account information: Outstanding balances, repayment histories, and total exposure for accurate creditworthiness assessments.
• Active search history: Historic credit search data for a deeper understanding into which businesses are actively looking for financial product.
• Continuous monitoring: Near real-time alerts on key financial changes, such as increased borrowing, liquidity issues, and risk signals.

Get first mover advantage – find out how your bank can transform complex data it into actionable insights for smarter lending decisioning across the entire customer lifecycle.

Book a ProBanker demo.