# Meeting Customers “Where They Are” Through Financial Inclusion and Hyper-Personalization Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-12-13 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: Leveraging Data, ML & AI in Financial Services Meta Description: Discover how advanced technology is transforming the financial services sector amid economic challenges, enabling personalised solutions for consumers. URL: https://financedigest.com/meeting-customers-where-they-are-through-financial-inclusion-and-hyper-personalizationhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1344037969-1736814723596-compressed.jpg) _How Data, Machine Learning and AI are helping the financial services sector adapt and deliver on these customer service imperatives_ _By_ **_Kathy Stares,_** _Executive Vice President of North America,_ [_Provenir_](https://www.provenir.com/) The current economic climate poses significant challenges for both businesses and consumers – a situation the financial services industry must recognize as both a threat and an opportunity. This past September, the Consumer Financial Protection Bureau noted the rising delinquency rate for recently purchased cars loans. Loans originated in 2021 and 2022 are starting to show [higher](https://www.financedigest.com/vhs-tapes-selling-for-46000-higher-than-original-price.html "VHS tapes selling for 46,000% higher than original price") delinquency rates relative to loans originated in previous years, even when compared to loans unaffected by pandemic-related stimulus payments. Auto loans originated in 2021 have a delinquency rate of 0.67 percent in the sixth quarter after origination, which is 13 percent [higher than the delinquency rate](https://www.financedigest.com/credit-suisse-offers-higher-deposit-rates-in-asia-to-woo-the-wealthy-sources.html "Credit Suisse offers higher deposit rates in Asia to woo the wealthy – sources") of auto loans originated in 2018. This concerning trend is even worse for subprime and deep subprime borrowers. Default rates on automobile loans are very telling because transportation is essential for a vast majority of consumers and there is strong incentive to stay current on payments. But you don’t have to look at auto [loan delinquencies to know](https://www.financedigest.com/home-equity-made-simple-things-to-know-before-applying-for-loans.html "Home Equity Made Simple – Things to Know Before Applying for Loans") that in the current inflationary era, borrowers are struggling. And with consumers’ shifting economic situations, risk profiles are changing, necessitating that [financial services companies meet their customers](https://www.financedigest.com/financial-companies-delivering-better-value-for-customers-in-loyalty-programmes-compared-to-other-sectors.html "Financial companies delivering better value for customers in loyalty programmes compared to other sectors") where they are by providing a higher level of personalization than ever before. Early insights into customers’ circumstances or preferences are critical to offer products and solutions to [meet](https://www.financedigest.com/stay-ahead-of-the-curve-and-meet-your-customers-payments-needs.html "STAY AHEAD OF THE CURVE AND MEET YOUR CUSTOMERS PAYMENTS NEEDS") changing customer requirements and minimize risk. How do you keep consumers whole? How do you keep them loyal? And how do you regain as many funds as you can? You do this by looking at how to leverage predictive [technology to understand which customers](https://www.financedigest.com/manchester-arts-centre-the-lowry-selects-logpoints-siem-technology-to-safeguard-customer-data.html "Manchester arts centre The Lowry selects LogPoint’s SIEM technology to safeguard customer data") have the best propensity to pay. You can do this if you are running AI and machine learning and looking at [customer status based on all sorts of alternative data](https://www.financedigest.com/should-insurers-buy-data-direct-from-their-customers.html "Should insurers buy data direct from their customers?") to gain a picture of where they are in their lives. Alternative data is key in this equation because information from the credit bureaus looks back and isn’t really predictive of a [customer’s current or future financial](https://www.financedigest.com/disconnected-customers-are-one-of-the-biggest-problems-facing-financial-companies.html "Disconnected customers are one of the biggest problems facing financial companies") health. We are in a very different place from where we were in 2008 when consumers started defaulting on mortgages en masse and no one was able to predict this. We are now able to create an [operational online environment that enables smart decisions with AI analysis to predict](https://www.financedigest.com/2021-predictions-operational-resilience-takes-center-stage.html "2021 Predictions: Operational Resilience Takes Center Stage") the next big fracture, so we can intervene to offer solutions to these consumers before default. Do we need to reduce their credit limit – not in a punitive way, but in a [way that is conducive to keeping](https://www.financedigest.com/three-ways-the-data-cloud-can-keep-financial-services-competitive.html "Three Ways the Data Cloud Can Keep Financial Services Competitive") them from getting too extended? Do you help someone by [restructuring their debt](https://www.financedigest.com/sovereign-debtors-creditors-agree-on-steps-to-jumpstart-debt-restructurings.html "Sovereign debtors, creditors agree on steps to jumpstart debt restructurings")? Whatever the case, the important thing is to have options before charge-off to get in on the early [collections and not be left](https://www.financedigest.com/click-and-collect-or-get-left-behind.html "Click and Collect or get left behind") holding the bag. These proactive efforts to keep consumers whole can make an indelible imprint on their psyche, such that they’ll continue to be loyal customers down the road, hopefully as they leave their financial struggles in the rear-view mirror. Meanwhile, the financial [services](https://www.financedigest.com/boom-or-bust-how-the-financial-services-sector-is-coping.html " Boom or Bust: how the financial services sector is coping") industry is owning up to the fact that there has been a significant part of the population excluded in the standard way financial instruments have historically been offered. In the past, only specific [financial organizations and institutions had business models](https://www.financedigest.com/10-ways-to-make-your-financial-model-easier-to-understand.html "10 Ways to Make Your Financial Model Easier to Understand") that revolved around servicing disadvantaged populations or subprime lenders. With the increased recognition of this [financial exclusion, banks and financial institutions](https://www.financedigest.com/3-ways-financial-institutionscan-leverage-live-engagement-on-social-media.html "3 ways financial institutions can leverage Live Engagement on social media") will need to serve all consumers, and it’s not going to be with these easily drawn lines as it was in the past. The industry is going to need to pivot and put new technology and processes in place to meet customers wherever they are along the full spectrum of [credit risk](https://www.financedigest.com/aon-assists-freddie-mac-to-reach-5bn-risk-transfer-milestone-for-u-s-mortgage-credit-business.html "AON ASSISTS FREDDIE MAC TO REACH BN RISK TRANSFER MILESTONE FOR U.S. MORTGAGE CREDIT BUSINESS"). This means leaning into [financial inclusion](https://www.financedigest.com/why-banks-could-stand-to-learn-a-thing-or-two-about-financial-inclusion-from-fintechs.html "Why banks could stand to learn a thing or two about financial inclusion from fintechs") and hyper-personalization. Use of prescriptive [analytics that leverage alternate data](https://www.financedigest.com/data-analytics-scenario-planning-and-the-finance-department.html "Data analytics, scenario planning, and the finance department"), machine learning and AI can help organizations be successful in these efforts. For unbanked and underbanked consumers, AI gives organizations the opportunity to support these consumers that don’t have a history of [data that is understandable](https://www.financedigest.com/how-data-visualisation-is-helping-the-insurance-sector-understand-environmental-risks.html "How data visualisation is helping the insurance sector understand environmental risks") or accepted by traditional decisioning methods. Because AI can identify patterns in a wide variety of data types – telco data scoring, employment verification, [social media](https://www.financedigest.com/10-tips-to-help-with-your-social-media-customer-care.html "10 TIPS TO HELP WITH YOUR SOCIAL MEDIA CUSTOMER CARE"), income verification and many more – it can power highly accurate decisioning, even for no-file or thin-file consumers. Alternative data provides a more varied [way for lenders](https://www.financedigest.com/5-ways-lenders-can-attract-the-younger-generations.html "5 Ways Lenders Can Attract The Younger Generations") to evaluate those individuals with a thin (or no) credit file by revealing a more holistic, comprehensive view of an individual’s risk. This vastly [benefits consumers who can’t be easily scored](https://www.financedigest.com/benefits-of-a-good-credit-score.html "Benefits of a good credit score") via traditional methods, but it also benefits financial institutions by expanding their total addressable market. It’s incumbent on [providers to meet customers](https://www.financedigest.com/banks-can-provide-a-protective-shield-to-defend-customers-from-cyber-attack.html "Banks can provide a protective shield to defend customers from cyber attack") where they are – with personalized offers and, in today’s trying economic times, with personalized assistance. Only those lenders leveraging alternative data, AI and machine learning will truly have the capability to understand their [customers’ current financial](https://www.financedigest.com/id-fraud-is-on-the-rise-can-financial-services-do-more-to-protect-their-customers.html "ID fraud is on the rise: can financial services do more to protect their customers?") situation and propensity to pay. With this knowledge, organizations are better prepared to take an active role in partnering with [consumers to boost their financial](https://www.financedigest.com/50-of-consumers-wont-spend-more-than-20-minutes-applying-for-financial-products-online.html "50% of consumers won’t spend more than 20 minutes applying for financial products online") well-being. **_![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/kathy-stares-provenir-1736814723521-compressed.jpg)_** **_About the Author_** _Kathy Stares serves as Executive Vice President of North America, at Provenir, which helps fintechs and [financial services](https://www.financedigest.com/4-ways-high-performance-analytics-powers-financial-services.html "4 ways high-performance analytics powers financial services") providers make smarter decisions faster with its AI-Powered Data and Decisioning Platform. Kathy leads sales, [customer success](https://www.financedigest.com/lumen-research-expand-us-operations-with-key-sales-and-customer-success-hires.html "Lumen Research expand US operations with key sales and customer success hires"), and pre-sales consulting teams across the Americas and oversees strategic partnerships. As a member of Provenir’s executive team, she is introducing creative account [management approaches to support](https://www.financedigest.com/how-to-manage-burnout-and-how-leaders-should-support-employee-wellbeing-tom-keya.html "How to manage burnout and how leaders should support employee wellbeing | Tom Keya") the company’s aggressive growth strategy._ --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---