What do merchants, salespeople, fraudsters, and regulators have in common? They each play a part in pressuring merchant acquirers and ISOs to automate the underwriting process. In a recently released eBook, Recombo dives deep into the inner workings of an automated underwriting platform helps acquirers assess the value and achieve a return on their investment.
What do merchants, salespeople, fraudsters, and regulators have in common? They each play a part in pressuring merchant acquirers and ISOs to automate the underwriting process. Merchants want to mimic the fast adjudication timeframes of software companies, salespeople are pushing for cheaper product activation models, fraudsters are more sophisticated at using technology to deceive, and regulators are increasing compliance burdens in response to a changing environment.
Recombo, a leading provider of automated merchant onboarding solutions, has published an eBook that dives deep into a complete outline of the inner workings of an automated underwriting platform, how each component works, and how businesses can maximize their ROI.
THE AUTOMATED UNDERWRITING PLATFORM
According to Recombo, the automated underwriting platform uses information from the merchant account application, credit bureaus, fraud services, and other data sources to decide if an applicant is worthy of credit or, in merchant acquiring, a merchant account.
Automated boarding platforms consist of four parts:
1) Digital merchant application: This collects the necessary information to adjudicate and open the account. It also has the customer agree to the terms and conditions of the account.
This should: Validate information as it’s entered into the application, be easy for customers to fill out, and have tools to help salespeople close deals.
2) Risk scorecard: An automated spreadsheet that uses data from the merchant application to produce a risk-based credit score as an output. The score is then used to decide whether or not to approve a merchant account.
This should: Take into account the credit processing volume, the average transaction size, type of goods sold by the company, the sales method, and more.
3) Business rules engine: The piece of the software that will apply facts or “rules” to the application to route the appropriate next process. Using automation, these rules will be applied to all information sources regardless of the complexity or volume of transactions.
This should: Be simple enough that a credit or risk analyst can build, manage, and tweak rules without knowing how to develop code.
4) Underwriting dashboard: This provides a summary of the information in the merchant application in addition to that collected by third-party data sources or input by risk team members.
This should: Provide an underwriter or credit analyst with everything they need to adjudicate an account on a single screen.
TOP TAKEAWAYS FROM THE AUTOMATED UNDERWRITING GUIDE
1) Taking a risk-based approach is important, and assembling a risk matrix is critical to understanding types of accounts and thresholds tolerable for an organization.
2) Generally, automated underwriting platforms can automatically adjudicate 80 percent of accounts, leaving the other 20 percent to be adjudicated manually.
3) The entire merchant adjudication and boarding process can be automated, including credit analysis, blacklist checks, ID verification, and more.
4) Automated merchant boarding platforms can be used to re-adjudicate a portfolio to identify accounts that have increased in risk or are no longer compliant.
For a detailed breakdown of how to best get a platform off the ground, common mistakes to avoid, and how companies can use the platform to empower their sales teams, download the eBook “The Risk Executive’s Ultimate Guide to Automated Underwriting” below.
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