Risk Solutions

COVID-19 has fast-tracked existing shifts in Australian consumer retail behaviour, promising to change the marketing, distribution and selling of automobiles forever.

Auto retailers need to adapt now to a new reality because businesses waiting for stabilisation are taking a considerable risk, said KPMG National Leader of Motor Industry Services, Steven Bragg. Speaking at the recent Equifax Automotive Finance Forum, Mr Bragg said the auto industry was in crisis and in need of transformation before the pandemic even came along.

It’s a well-known fact that registering on the Personal Property Securities Register (PPSR) boosts your rights when faced with customer insolvency. It’s a lesser-known fact that it’s equally useful when a customer wants to sell their business.

If one of your customers goes bust and you’re not a secured creditor, expect to lose out. There’s a world of difference between registering on the Personal Property Securities Register (PPSR) to become a secured creditor or remaining unsecured by not registering.

When a business goes into insolvency, there’s an order by which creditors are paid. Secured creditors take precedent, along with the insolvency practitioner, who receives a fee for managing the process. To be a secured creditor, you must have successfully registered your security interests in equipment and goods (‘personal property’) that you’ve sold on terms or leased to the customer. This registration happens on a national online noticeboard known as the Personal Property Securities Register (PPSR).

Few can predict what the economic fallout of the COVID-19 crisis will look like long-term, but even before this pandemic, there was a growing need for lenders to get better at predicting credit risk.  With a greater influx of data and rapid changes in consumer behaviour, traditional risk scoring models like linear regression, are often not up to the task of predicting default risk for complex applications involving multiple data sources and relationships.

Without the right attributes in place, businesses will lose access to vital intelligence behind the ever-expanding data landscape.

“The information consumers generate will grow from 33 zettabytes in 2018 to 175 zettabytes by 2025 across the globe,” predicts market intelligence firm IDC. Along with an average growth of 27% per year from 2018 to 2025, IDC estimates that by 2025, “every connected person in the world on average will have a digital engagement over 4,900 times per day – that’s about one digital interaction every eighteen seconds.”

The arrival of open banking and the growing value of data processing and analysis makes data collaboration within and among businesses more crucial than ever. Meaningful collaboration requires teams and industry partners to work together in real-time, sharing ideas, criticisms and understandings of the data they are all using.

COVID-19 has pushed into the limelight the issue of large firms paying their small business suppliers late. But long before this pandemic, habitual late payment practices have challenged the cash flow of many a small business.

Ready, set, go. Equifax data scientists around the globe sprung into action. The project was to investigate how to classify bank transaction data to make it more meaningful. Could it be categorised in a way that would enrich insights and help lenders better assess risk, ultimately improving customer experience? Competitors were furnished with raw unstructured transaction data from Spain and told to use advanced analytics and innovative techniques to solve this challenge.

The escalation of credit issues under COVID-19 has introduced a new challenge to the hardship strategy of lenders. With a significant increase in the number of accounts requiring financial assistance, the ability to assist customers to better financial health has come under strain. Managing a large volume of customers – each with a different circumstance – lenders must find a way to ensure customers who need the most support are the ones to receive it.