EXCESSIVE GAMBLING /VULNERABILITYOne of the key identifiers forpotential vulnerability is excessivelevels of gambling. Salad appliesa strict tolerance for gamblingwithin its pre-screening criteria. Allapplications where the consumerspends meaningful amounts ongambling, frequently and over asustained period are declined.This highlights that lenders which relysolely upon CRA data to make theirlending decisions are not effectivelyidentifying potential vulnerability dueto excessive gambling.It demonstrated that:Using Open Banking is a superior wayof identifying and mitigating potentialcustomer vulnerability.Part of the retrospective analysisinvolved assessing whether creditscore/risk segment was an effectivemeasure of excessive gambling. Itrevealed a weak correlation betweencredit score and the likelihood for thecustomer to be gambling excessively.Please read our February 2023paper, HARMFUL GAMBLING: Usingfinancial data to understand patternsof problem gambling.• Addictive and problem gamblingis increasing, is prevalent acrossall demographics, and is notbeing addressed by the gamblingindustry.• Gambling is common amongfinancially vulnerable peopleseeking a loan.• Worryingly many in the traditionalconsumer credit industry aremaking poor lending decisions forvulnerable consumers.UNDERSTANDING APPLICANTDEBT: A COMPARISON BETWEENOPEN BANKING AND CRA DATAA traditional CRA will (if its datais accurate) show how much acustomer currently owes to othercreditors such as credit cards,loans, car finance, and theirmortgage.Some industry insiders haveexpressed a concern that OpenBanking does not show the totaloutstanding balance for each creditaccount that the customer holds.However, Open Banking allowsSalad to see exactly what creditcommitments the customer isrepaying each month and anynew loans taken out (which can beidentified via the loan credit beingpaid into the customer’s bankaccount). Open Banking also showscredit commitments which are notreported to CRAs (e.g. BNPL).We compared the credit outgoingsdata available using Open Bankingagainst the outstanding debtinformation and monthly repaymentinformation returned by the CRA. Thedata comparison revealed that:• Open Banking offers a moreaccurate assessment of thecustomer’s credit commitmentscompared to CRA data.• Open Banking will cover any recentcredit taken out, which may notyet be reported by the CRA, andcaptures actual repayments beingmade – with no issues on reportinglags, or account types which arenot fully reported (such as Buy NowPay Later).• For the lowest deciles, CRA datais significantly underestimatinghow much a customer owes / isrepaying.Comparing the value of Credit Reference Agency data with Open Banking when serving financially excluded people9
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