Digital transformation

PSD2 for your credit management

November 2, 2021 - 2 minutes reading time
Article by Robert Koot

Payment Service Directive 2 (PSD2) is a new European directive for payment services, which enables consumers to allow service providers other than their own bank to access their payment account. The goal of PSD2: more competition in the payment market. For lenders, the new directive has important advantages. Insight into the payment behavior of consumers and businesses helps in assessing credit applications. What are the main reasons for using PSD2 for your credit management?

1. Easier customer acceptance

Is the traffic light going to be green, orange or red? That's the question you want answered when reviewing a credit application. The speed with which this answer emerges plays an important role in the flow of your sales process. Building a risk profile to arrive at this answer is just part of the sales process. Whereas you used to have to consult numerous sources, the arrival of PSD2 makes this a lot easier: with just an analysis of a credit applicant's payment account you can already draw up an accurate risk profile.

Building the risk profile is done by analyzing the account holder's income and expenses. From this it can be quickly established whether this pattern falls within the right frameworks to be able to grant the credit. The analysis consists of a calculation that answers the question of whether there is sufficient capacity to repay the loan. This quickly performed calculation enables organizations to speed up the sales process.

2. Higher Straight-Through Processing score

More automation means less worrying about your review process. With the addition of PSD2 to your credit management, you'll thus increase your straight-through processing score. The data obtained from the account combined with your credit management tool ensures minimal human intervention. This makes the credit assessment process a lot less labor-intensive and therefore less prone to errors. In addition, PSD2 ensures better quality results, the assessment takes place in real time and there is minimal risk that the credit applicant can avoid or manipulate a step in the assessment process.

3. Customized offers

With the addition of PSD2 to your credit assessment process, you increase the quality of the information based on which you make decisions. This makes it possible to build very accurate risk profiles and tailor offers. Thanks to this accuracy, you can also broaden the frameworks in which you provide credit. After all, working with more information means that as a lender you can significantly reduce risk. Thus, shifting the boundary when it comes to lending creates more sales opportunities.

4. Gain consumer confidence.

Credit is woven into the offerings of many products and services. Whether it is mortgages, lease contracts or purchases in webshops, credit can be taken out anywhere. The provision of credit will not disappear any time soon, but PSD2 will change the way in which applications are assessed. This does require consumer confidence, because people do not give away their account information just like that.

Wondering how to go about it or want to know more about the reasons to use PSD2 in credit assessments? Download the whitepaper How PSD2 ensures reliable credit assessments.

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