ATLANTA, GA — In its quest to bring more small businesses into the financial system without increasing risk to lenders, LexisNexis® Risk Solutions announces the release of two updated small business assessment products: a new and improved 2.0 version of its widely used Business InstantID® tool and the Small Business Credit Score. Lenders that serve small businesses will now have access to state-of-the-art business identification and entity linking that helps meet Know Your Customer (KYC) and new ultimate beneficial ownership (UBO) requirements; additionally they will be able to credit-risk assess their small business clientele through nontraditional data sources.
Many lenders are now targeting small businesses to drive growth, and customer acquisition is the top lever to achieve their goal. But a recent survey of small business owners confirms what most small business lenders have known for years: information on small businesses is often sparse, making it a challenge to lend to this high-volume and high-potential population. In fact, recent studies suggest less than half of small businesses have a traditional credit history, and of those that do, half or more are thin files. This makes it a challenge for financial institutions to use traditional methods to assess the credit risk in these millions of thin- or no-file businesses.
Ben Cutler, senior director, Small Business Risk Management, LexisNexis Risk Solutions, commented: “There are millions of underserved small businesses out there and banks’ requirements for knowing their customers become more stringent all the time. It’s my belief that we can bring many thin-file and no-file small businesses into the financial system using non-credit, “alternative” data sources—without adding additional risk into the financial system. Every day, LexisNexis Risk Solutions provides thousands of financial institutions and corporations with access to data that increases approval rates, standardizes decision-making processes, reduces staffing costs and documentation requirements, and builds consistency between front-end and back-end account workflows. We are excited to release our most advanced business verification product to date, Business InstantID 2.0—to further improve our customers’ verification processes. We believe this new version will help better manage risk, as it is built on more content, better entity linking and more advanced analytics than the original version of Business InstantID. Furthermore, we’ve added functionality to specifically address the upcoming ultimate beneficial owner regulations.”
For financial institutions looking to expand their position in the small business credit market, the LexisNexis® Small Business Credit Score leverages alternative data to provide insights on all businesses—thick files, thin-files, and no-files—to enable lenders to confidently extend more credit offers to the millions of small businesses without a traditional credit profile. Alternative data—which is derived from a small business’ many non-credit relationships—can “see” and risk-rate a small business up to five years before it develops a traditional credit profile. This allows financial institutions to confidently risk assess and establish credit relationships early, leading to increased customer loyalty and more opportunities for expansion down the road.
Cutler noted: “It’s often said a small business is the person(s) behind that business. Recent surveys prove that most small business owners blend their personal and business operations. The Small Business Credit Score blends information on the person and the business to further increase financial institutions’ ability to segment risk. One of our goals at LexisNexis Risk Solutions is to foster greater transparency throughout the financial ecosystem. These two new offerings are an unmatched way to help financial institutions achieve that for small businesses.”
About LexisNexis Risk Solutions
At LexisNexis Risk Solutions, we believe in the power of data and advanced analytics for better risk management. With over 40 years of expertise, we are the trusted data analytics provider for organizations seeking actionable insights to manage risks and improve results while upholding the highest standards for security and privacy. Headquartered in metro Atlanta USA, LexisNexis Risk Solutions serves customers in more than 100 countries and is part of RELX Group, a global provider of information and analytics for professional and business customers across industries. For more information, please visit www.risk.lexisnexis.com.