In-depth Guide

Risk Intelligence: A Complete Overview

In this post, we’ll explore the emerging field of Risk Intelligence and how it is changing the world of account opening, underwriting, and manual reviews for the better.

The everyday struggle of lenders? Getting an in-depth understanding of their customers’ risk profiles.

Most data sources they use when evaluating applicants are outdated, costly, or can't provide an exact measure of the true risk value. A report from LendIt and Brighterion shows 40% of financial institutions still use legacy rules-based systems. Another 26% review customers’ applications manually when assessing financial risks.

Business rules management systems may provide some automation, but they’re too rigid to adapt, learn, or scale with the rapid growth of financial data.

This is where risk intelligence comes in.

What is risk intelligence?

Risk Intelligence is the most powerful way for risk teams to identify fraudulent/legitimate and risky/creditworthy customers.

Risk Intelligence is the most powerful way for risk teams to identify fraudulent/legitimate and risky/creditworthy customers. Instead of relying on tedious, subjective, and error-prone manual reviews, teams that use Risk Intelligence software are equipped with AI-powered fraud and credit insights that eliminate uncertainty and make risk decisions easier.

With Risk Intelligence, companies can effectively build digital trust and approve more customers with confidence.

Making accurate risk decisions can be hard, particularly in a business environment subject to constant disruption.Superior financial risk management — backed by scenario-based foresight, monitoring of early indicators, and crisis-response capabilities — can help your business gain a competitive advantage.

Let’s dive into a few more benefits of risk intelligence.

What are the benefits of risk intelligence?

Today’s risk functions are encountering unforeseen threats with increasing frequency.

It’s no wonder 79% of financial institutions prioritized enhancing risk data quality, availability, and timeliness even before the global pandemic hit.

Besides giving your business a competitive edge, risk intelligence has other benefits. Some top reasons lenders and other financial institutions use risk intelligence include:

  • Finding a granular set of data to help you improve your risk prediction models.
  • Simplifying lending processes for customers to give them faster responses without the hassles of more paperwork and waiting days for results.
  • Getting a complete picture of the risky patterns of your customers.
  • Identifying and navigating threats earlier and more effectively.

Here's a real-world example that captures the power and benefits of risk intelligence based on General Services Corporation (GSC)'s experience.

During the pandemic, GSC — a leading apartment homes and apartment management services provider — fell victim to the federal government's temporary national moratorium on evictions for nonpayment of rent. 

The directive (which meant extending tenant eviction processes by several months) significantly increased GSC’s risk of approving unqualified applicants. The company experienced an uptick in fraudulent applications as prospective tenants used altered or fake bank statements and pay stubs to substantiate their income.

All these factors increased GSC's need to identify falsified or fraudulent documents quickly and accurately while streamlining the application process and avoiding tenant evictions. With no manual way to verify the fake documents, GSC turned to Inscribe.

During a trial period, GSC experienced 12-second document verification times, 11% of documents flagged as fraudulent, and 161% return on investment (ROI). In addition, Inscribe helped the company:

  • Catch fraudulent applications
  • Save their team’s effort
  • Ensure prospective tenants meet the application criteria
  • Reduce evictions

This brings us to the next question: how does risk intelligence technology work?

How does risk intelligence work?

Like an MRI scan of a person’s physical health, business risk intelligence involves an in-depth analysis of a customer using their identity documents and transaction data to determine their trustworthiness and financial health.

Basically, risk intelligence works by:

  • Gathering all your customer’s documents (bank statements, utility bills, pay stubs)
  • Checking those documents for signs of manipulation
  • Assessing income and financial data to determine creditworthiness
  • Making a data-driven decision with the insights extracted

Instead of risk professionals using manual reviews of credit reports and other financial documents to determine an applicant’s creditworthiness, they use risk intelligence tools to manage their risk appetite, assess financial habits, and check for signals of fraud.

Through artificial intelligence (AI) and machine learning (ML), risk intelligence software analyzes millions of data points, drawing predictive power to produce detailed information beyond credit scores. Plus, you get more data to improve your in-house risk modeling and insights for better risk decisioning and painless, timely delivery of responses to your customers.

What is risk intelligence technology?

Through artificial intelligence (AI) and machine learning (ML), risk intelligence software analyzes millions of data points, drawing predictive power to produce detailed information beyond credit scores

In a volatile, fast-paced, and more complex world, banks are experiencing more operational risks than they did two years ago. Potential risks and external threats are emerging more rapidly than ever before.

There’s more pressure to create operational and financial resilience against increasing uncertainty and unpredictable risks and shocks. Risk intelligence technology helps banks stay in business without compromising their financial integrity or security.

These tools use AI and ML to analyze the data from customer documents and check them for signs of manipulation (to assess trustworthiness) and extract credit insights (to assess creditworthiness). That way, lenders can better understand the potential risk and mitigate it more effectively.

In addition, the software assesses many data points, allowing lenders to quickly realize actionable intelligence that helps protect them from losses.

What types of risks can risk intelligence technology mitigate?

Across the financial industry, risk intelligence applies to an ever-increasing number of risks, including:

  • Credit risks: The potential loss lenders suffer when customers fail to pay their debts. Risk intelligence tools can conduct more thorough default probability analysis and enhance early detection and warning signals of such behaviors.
  • Fraud risks: These come from fraud threats from ever-increasing attack vectors in a connected world. Risk intelligence software detects suspicious activity, mitigating these risks by identifying IT system anomalies and predicting attacker behaviors in advance.
  • Compliance risks: Financial regulatory compliance is a complex and rigorous process that if handled carelessly can result in legal sanctions, reputational damage, and financial loss. Risk intelligence technologies help detect compliance gaps while ensuring adherence to laws, standards, and guidelines.

Gain more risk intelligence

Financial institutions are highly susceptible to risk. Sophisticated risk intelligence tools like Inscribe, which offer advanced analytics and automation, are reshaping how lenders handle risk management and fraud prevention.

Inscribe’s Risk Intelligence technology offers a capable, real-time, and effective way for you to:

  • Automate manual reviews
  • Reduce fraud risk, losses, and operational costs
  • Increase accuracy and efficiency of risk decisioning

It’s no wonder leading fintechs like Ramp, Plaid, Bluevine, and Navan trust Inscribe to uncover the insights they need to assess risk and build digital trust.

Interested in joining their ranks?

Talk to an expert today to learn more about Inscribe’s Risk Intelligence technology. 

In today’s digital world, customers expect the same fast, seamless experience whether they are shopping for a sweater or applying for a loan. Unfortunately, for financial services organizations, such as banks, credit unions and credit card providers, making smart decisions about which customers to serve and which products they are best suited for takes time.

 The underwriting process for a mortgage, for example, can take several days or even a month. The underwriter or risk analyst manually reviews the documentation submitted with the application and verifies key points, like the person’s salary and employment status. Estimates for other requests, like personal loans or housing applications, can be similarly painstaking, often taking up to a week or more.

Unfortunately, as digital fraud continues to rise, it’s likely that these timelines will only stretch longer as decision-makers at banks, financial institutions and rental agencies request more information to establish the creditworthiness of their potential clients and ensure they are not doing business with high-risk individuals.  

But here’s the catch: More information doesn’t always equate to better decisions, especially when fraudsters can easily manipulate documents or use online templates to create fake ones. What it does mean is longer wait times for your customers, as reviewers manually pore over those documents, like bank statements, employment contracts, pay stubs and utility bills.

With Risk Intelligence, manual reviewers spent days and even weeks pouring through documents to determine a potential customers eligibility and trustworthiness.

The cost of fraud for businesses and customers

This issue has a real impact on companies: New research shows that the average U.S. fintech loses $51M to fraud annually – and that’s to say nothing of secondary costs, like dips in productivity during the underwriting or application process, time spent following up on delinquent accounts, legal fees and more.

There’s real pain on the customers’ end too. When a suspicious application is flagged for further review, it slows down the process for all clients. That means legitimate and creditworthy customers must wait longer for decisions at a time when they expect instantaneous results. With every hour that ticks by, the chance that they will move on to a competitor increases.

So what’s the solve? In today’s high-risk, fast-paced, and ultra-competitive landscape, risk teams need to combine their hard-earned experience and intuition with new and powerful technologies to enable better, faster decision-making. In this post, we’ll explore the emerging field of risk intelligence and how it is changing the underwriting and application process for the better.

What is risk intelligence?

Risk Intelligence is an emerging and evolving field – and Inscribe is at the very forefront of the movement.

Risk Intelligence is the most powerful way for risk teams to identify fraudulent/legitimate and risky/creditworthy customers. Instead of relying on tedious, subjective, and error-prone manual reviews, teams that use risk intelligence software are equipped with AI-powered fraud and credit insights that eliminate uncertainty and make risk decisions easier. With risk intelligence, companies can effectively build digital trust and approve more customers with confidence.

Modern risk intelligence is digital. AI-enabled software produces clear and actionable insights that help risk teams make the best decision – fast.

The value of risk intelligence

Risk intelligence can help your company:

  • Reduce fraud and credit losses 
  • Identify signs of manipulation or fraud in seconds
  • Identify fraudulent documents with enhanced precision and accuracy
  • Approve creditworthy customers with a high degree of confidence
  • Eliminate tedious, subjective, and error-prone manual reviews
  • Build digital trust and expand your competitive edge

Traditional risk assessment vs risk intelligence

To understand the value of a modern risk intelligence program, let’s review how this capability differs from traditional risk assessments.

Traditional risk assessment processes are… Modern Risk Intelligence is…
Risk teams are overwhelmed with document reviews and struggle to support a growing business without increasing risk.
AI-enabled software produces clear and actionable insights that help risk teams make the best decision – fast.
Risk analysts take educated guesses to identify manipulated documents, leaving their business open to fraud and credit losses.
Risk Intelligence is based on AI-enabled technology that is guided by clearly defined standards and metrics – not hunches, guesses, or intuition, which may also be clouded by human perception and bias.
Customers are forced to wait hours, days, or even weeks to access financial products.
Efficient and effective
Companies review documents and identify signs of fraud or manipulation in seconds –giving customers the answers they need and the experience they expect, while freeing up staff to focus on higher-value tasks

The benefits of risk intelligence

Risk intelligence drives growth and profitability.

Risk intelligence is an important way for companies to not only reduce risk, but also fuel growth and profitability. This is done primarily through process automation, which increases speed and reduces the cost of reviewing each document. 

What’s more? By eliminating pain-staking, time-consuming manual reviews, the organization can cut down on workforce fatigue, which may contribute to poor or incorrect decisions. Finally, by automating routine and repetitive tasks, risk teams are free to focus on higher-value, customer-facing work – activity that helps the business flourish.

Risk intelligence improves accuracy and reduces risk. 

Risk intelligence also prompts the organization to think about risk in a more structured and comprehensive way. As part of this process, businesses must define risk and outline the standards by which to measure them, as well as mechanisms that will be used to identify them. 

In so doing, risk assessment is no longer subjective, but objective – and therefore more consistent and effective. Instead of manually reviewing all documents for signs of fraud, analysts can now spend time focusing only on those cases that truly need their attention. Best of all, with the help of risk intelligence software, analysts typically have more confidence in their decisions and can more easily articulate the logic for questionable cases.

Risk intelligence helps create a more fair and equitable financial system for all. 

On a broader level, risk intelligence can also help create a more fair and equitable financial system for people by helping millions of unbanked, “thin file,” and credit invisible consumers access the products and services they need. 

When banks, financial institutions and other companies eliminate obvious cases of fraud with the help of a risk intelligence tool, they have the option to take on legitimate customers that they may not otherwise be able to serve.

Financial institutions that prioritize risk intelligence are able to create better customer experiences and approve more legitimate applications.

What can modern risk intelligence software do? Key capabilities and use cases

Risk intelligence software is invaluable to modern businesses, helping them drastically improve both time- and cost-to-serve, while also reducing fraud and credit losses. Taken together, these metrics help reduce risk while also fueling growth and profitability.

Risk intelligence capabilities

Identity verification: Review documents that are flagged by an identity verification platform for further review.

Document collection: Collect any additional proof of identity or ownership documents during onboarding. 

Data digitization: Automate tedious activity like classifying, parsing, and matching names and addresses when additional info is needed.

Fraud detection: Identify instances of fraud within a document in seconds. Pinpoint exactly what’s been altered

Automatic decisioning: Auto-accept, auto-reject, or get notified when to review documents. Support clear, fact-based decisions.

Risk intelligence use cases:

  • Account opening, Know Your Customer (KYC) and Know Your Business (KYB)
  • SMB lending, personal lending, underwriting
  • Auto loans
  • Mortgages
  • Tenant screening
  • Cryptocurrency
  • Insurance and claims processing
  • Debt verification and income verification
  • PO processing and invoice processing
  • Expense reports
  • Tax forms

Get to know Inscribe – the leader in risk intelligence

At Inscribe, our mission is to help solve the uncertainty faced by risk teams everywhere by building artificial intelligence based on the heuristics used by manual review teams. For the first time ever, companies can build digital trust by quickly analyzing billions of data points with a high degree of accuracy and uncovering insights that were previously invisible to the human eye. We consider ourselves to be the latest example of a technology that makes what’s invisible, visible– not unlike the telescope, the microscope, or the x-ray.

To learn more about Inscribe’s award-winning risk intelligence technology, please contact us to set up a free demo.  

Want to learn more?

Check out our other guides on risk intelligence:

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