Financial institutions (FIs) are trying to cut costs to remain profitable in the ever-changing marketplace. Some FIs have even tried imposing new fees to recoup costs and increase revenue, but consumers didn't accept them. One way that FIs can cut costs is to reduce fraud-this will not only reduce the FI's losses, but protect their customers. Fraud prevention starts with the decisioning process. FIs should look at new and emerging alternative data sources, incorporating them into business logic, and test new logic to ensure that fraud prevention goals are being met.
FIs must use the vast amount of data available to them through data providers to make their processes more intelligent. Alternative credit data providers aggregate consumer information that can't be found in a traditional credit file. This information includes: rental history, utility and cell phone bill payments, payday lender information, and criminal history.