Helping credit providers verify their customers' income
Belvo has developed a new Open Banking solution that allows lending companies in Latin America to get a real picture of their clients’ income.
The new solution uses Belvo’s API to access customer data, then aggregates and enriches this information using data science techniques to identify account movements that correspond to income with up to 90% reliability.
This new income verification product –already available in beta– is the first one designed to meet the particular needs of the credit lending sector in Latin America. Thanks to this, lenders and fintechs in the region will be able to improve their knowledge of their users’ real financial stability and ability to pay, in order to develop more tailored credit services, faster and at a lower cost for them.
A tailored solution for Latin America
Only 18 percent of adults in Latin America use credit products from financial institutions, compared to 68 percent in the US, according to data from the World Bank. High interest costs, as well as the down payments and paperwork often required, are some of the hurdles that make these services still inaccessible to a large part of the population.
In addition, lenders lack access to available sources of data that they can use to create accurate risk models for their product offering, such as income. And the systems they currently use are time-consuming and inefficient:
- The most common way to access this information is the manual collection of payslips or account statements. This solution entails a high consumption of resources and time. And the data they provide is unverifiable and prone to errors.
- For those users who have a credit history, institutions like credit bureaus in countries like Mexico and Brazil can provide companies with some income data. However, it’s often outdated, incorrect, and only available to some users.
Open Banking for lending
To solve these challenges, Belvo has developed a data-science-based model that analyzes user account movements to find patterns in the frequency and quantity of transactions, as well as the combination of certain keywords that indicate if they correspond to income or not.
With this information, the model is able to identify the movements that correspond to recurrent income with a reliability of up to 90 percent. It offers customers a reliable and regular source of information, which allows them to better understand the characteristics of their users’ income, as well as to predict its possible evolution over time. Specifically, the solution allows customers to obtain aggregated information about the type of income, the source of origin, the amount, the currency, and the recurrence.
The solution has been developed to provide useful information to companies about their customers in all kinds of financial circumstances. Including irregular sources of income, which are often difficult to detect in traditional models. Belvo has launched this new product in response to the clear demand from its clients.
“Being able to verify the income of a potential customer in a reliable and efficient manner is key for credit lending companies in Latin America. However, many do not have the technological capacity to extract and analyze this data. And that is precisely our goal: to provide them with solutions that they can quickly integrate into their products and use in an easy and convenient way, so they can focus on creating more personalized and inclusive solutions,” explains Pablo Viguera, CEO and co-founder of Belvo.
Beyond the credit market, the solution can be integrated into products in other sectors. From retail to real estate: whenever companies need to verify a customer’s income in a fast, secure and convenient way. For example, to speed up consumer financing processes at points of sale.
New data enrichment solutions in 2021
Belvo is already working on several new data enrichment products to be launched in 2021 that will allow companies to access other useful sets of information about the financial life of their customers. Such as credit scoring insights, information on assets and liabilities, and financial reports.
These new data enrichment solutions now join the account aggregation services that Belvo currently offers in Mexico, Brazil, and Colombia.