A Better Way to Help Assess DDA Risk
It is no revelation that the Consumer Financial Protection Bureau (CFPB) wants to ensure that banks and credit unions are appropriately and fairly meeting the needs of consumers. This includes the agency strongly recommending that financial institutions implement an open-all strategy for consumer demand deposit accounts (DDAs) and help provide deposit account options for “credit invisible” Americans with limited credit history.
But, there is a delicate balancing act between addressing CFPB expectations, while helping to manage the risk that comes with a more inclusive account opening policy for financial institutions. Adopting a more open-all strategy, financial institutions may need a robust alternative to the traditional methods typically used to assess the risk of potential new DDA customers.
The Insight Score for Retail Banking (ISRB) from Equifax combines the company’s proprietary credit data with powerful alternative data that includes payment history from the utility, pay TV, wireline and wireless communications industries that is not available or offered by other third party providers. This unique score helps give financial institutions a more comprehensive picture of consumer risk, instead of generally relying only on negative information to make a decision on whether or not to open a deposit account.
With ISRB, financial institutions can put into effect an open-all strategy for consumer demand deposit accounts, while helping grow potentially high life-time value DDA households.
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