The new anti-usury law, declining revenues, increasing demands, and technology that helps lenders
Digital customer profiling using financial data and open banking
May 24, 2023Table of contents
Black clouds are once again gathering over loan companies
The Polish financial services market is preparing for another version of the so-called 'anti-usury law'. According to the intention of the legislator, the changes introduced are to effectively reduce the cost of loans for consumers. The act also imposes new obligations on lenders.
Not surprisingly, the non-bank lending sector is anxiously awaiting the new challenges. On the one hand, a reduction in revenue is expected, on the other, the increased costs required to implement the changes required by the new regulations. Will the lending business be able to be profitable in such a situation?
New obligations and severe penalties
The new increased capital requirements are only one of the barriers to doing business associated with the new anti-usury law. Another could be the regulations being introduced requiring lending companies to examine a customer's financial situation, assessing their income and expenses, before granting a loan.
Together with the package of new obligations, lenders face even more meticulous supervision by the Financial Supervision Authority. In the new version of the law, the authority has been given additional powers and the size of potential penalties for non-compliance with the regulations has been significantly increased.
Technology can save the profitability of lenders
In this situation, companies offering consumer loans are starting to look closely at banks, which have been operating under the control of the Financial Supervision Commission for many years and have long been assessing the financial situation of customers according to guidelines that will soon also apply to non-bank lenders.
So let’s not reinvent the wheel. Based on this assumption, lenders are already looking for solutions that have proven themselves in the banking sector.
Polish banks, although considered to be among the most technologically advanced in the whole of Europe, do not show any particular initiative when it comes to exploiting the potential of the PSD2 directive. They are content with having access to their customers' data. With the data they collect, they can effectively assess their financial situation, but analysing other banks' customers is difficult for them. This is why it is easiest to get a loan from 'their' bank, even though it may be more advantageous and cheaper elsewhere.
This is why loan companies are starting to use automated, digital methods to verify the identity and assess the financial situation of the borrower. This is essential for lending and borrowing where the customer has no previous relationship with the lender. Such income confirmation and financial analysis is based on data from banks, available thanks to the PSD2 regulation. This increases the competitiveness of the offering and gives the customer choice without condemning them to a relationship with one bank.
Potentially, it is not only lenders and customers who can benefit from these solutions, but the banks themselves, especially those who want to offer their loan products to new customers. In the context of the anti-usury law, it is important to note that banks are looking to specialised financial technology providers when introducing these modern solutions. As a result, modern, advanced commercial solutions are appearing on the market, available to any lender, whether it is a bank or a loan company, specialising in consumer loans, debt consolidation or so-called ‘payday loan’.
Artificial intelligence and automation significantly speed up customer verification
The best of these tools use multidimensional analysis of customer financial data using machine learning and artificial intelligence. The data is extracted simply and quickly as part of the open banking service and includes information on both positive and negative financial events.
As a result, in a fast and secure manner, a customer applying for a loan is subjected to a reliable and automatic verification of their financial situation. In this way, not only are the stricter requirements of the new anti-usury law met, but the entire loan granting process is improved. Customer satisfaction increases, the risk of operational errors decreases and the lender benefits from technology proven by the most advanced banks.
AIS Gateway opens the door to the future for lenders
A provider of this type of technology for the financial sector is AIS Gateway, an expert in exploiting the synergies between open banking data and the analytical potential of artificial intelligence. It offers a wide range of services based on PSD2 standards and multi-directional database analysis, including income confirmation.
This interesting solution, developed by AIS Gateway, is distinguished by a number of features that further enhance the credibility of the lender's assessment. The system is able to identify suspicious and fraudulent bank accounts used by so-called ‘money mules’, so it effectively prevents loan scams and money laundering attempts.
The solution works in real time and is fully automatic, it also meets banking technology standards and can therefore be an important element in adapting the lending business to the new requirements of the anti-usury law. This is further proof that skilfully designed technology enables businesses to effectively adapt to the ever-increasing legal obligations and requirements of the authorities overseeing the financial sector.
