Open Banking could help reduce delinquency

He Delinquency Index (Imor) of banking in general continues to fall, since last February this was 2.09%, compared to that reported in January 2023, which stood at 2.11%, however, experts indicate that technology can contribute to a further drop plus indicators.

According to Nick Grassi, co-executive director of Finerio Connectkeeping delinquency levels low is key in a context like the current one, where inflation remains high, as well as the rise in interest rates, so financial institutions must take proactive measures to mitigate the risk of late payments by their clients.

“In economically difficult times, financial institutions must take proactive steps to mitigate the risk of late payments from their customers. One way the industry can do this is by focusing on offering practical and utilitarian products that are tailored to the individual needs of its customers. By doing so, they can provide their clients with the financial support they need, thereby minimizing the risk of default,” Grassi explained.

The manager indicates that the financial sector in general can control risk through the use of technologies such as open banking, a set of tools with which financial institutions are allowed to share data securely about their customers that enable informed decisions about credit risk and the suitability of different financial products.

“With the Open Banking financial institutions can access data on their clients’ spending habits, credit history, and income, among other relevant factors. This helps develop a more detailed and accurate profile of each user; In turn, this can be used to tailor financial products to your individual needs. By tailoring financial products in this way, financial institutions can help their clients avoid arrears and default on their loans,” Grassi said.

In this sense, the financial sector can minimize the risk of delinquency by offering practical and utilitarian financial products adapted to individual needs and based on the possibilities of the users. The use of open banking can help the industry achieve this goal by providing them with access to a broader range of data about their customers and a robust digital infrastructure.

“By taking advantage of these opportunities, financial institutions can develop a more accurate picture of each customer’s financial situation and tailor their products accordingly, reducing the risk of delays and defaults.”