“Success attracts criminal activity.” At least that’s what I heard from many of the alternative lenders at LEND360 in Atlanta.
As traditional lenders have adjusted their credit policies amid rising delinquency rates, alternative lenders have been willing and able to serve consumers who might otherwise be turned away. By investing in digital channels, new products, and new markets, their popularity has grown exponentially.
“Suddenly we’re on the radar of organized fraud rings,” one lender told me. “Our existing fraud detection strategies have definitely needed strengthening.”
Adding extra layers of fraud protection to the application process takes an incredible amount of thoughtful consideration. For example, the lender must ensure a process that:
- Stops highly suspicious applications at the very beginning of the application, so downstream (potentially costly) fraud screens aren’t needed
- Avoids application abandonment among good, qualified borrowers
- Adds good protection at a reasonable price. (For financial services companies, the cost of acquiring qualified leads is already a lot to stomach!)
It was my sense that alternative lenders were actively seeking new partnerships to help them achieve these fraud-related goals and optimize their application processes. Their willingness to collaborate – as well as their digital savvy and nimble operations – make alternative lenders easy (and fun!) to do business with.