Confidence in Data, Analytics, and Artificial Intelligence to assess consumer credit risk remain strong among Singapore organisations since COVID-19
The pandemic has accelerated a digital transformation for many companies, but just over a third (35 per cent) of APAC organisations have made operational adjustments to meet new consumer demands for digital engagement. With more than half of 1,200 consumers surveyed in APAC expecting to increase online spending both in the short-term and within the next 12 months, 43 per cent of consumers have higher expectations of their online experience, according to Experian’s Global Insights Report, one of the first large-scale surveys assessing the impact of COVID-19 on businesses and consumers.
Experian – a leading global information services company – surveyed 3,000 consumers and 900 executives working in retail banks, e-commerce, consumer technology and telecommunications. Respondents spanned Australia, Brazil, France, Germany, India, Japan, Singapore, Spain, the United Kingdom and the United States. The survey was conducted in June and July and covered consumer and business economic outlooks, financial well-being, online behaviour and more. 300 consumers and 90 businesses from Singapore participated in the study.
Globally, twice as many consumers are having problems paying their bills since COVID-19. This is a trend prevalent across all regions, with more than a fifth (21 per cent) of the 1,200 consumers surveyed online in Australia, India, Japan and Singapore finding it challenging to pay their credit card and utility bills since the start of COVID-19. 23 per cent of consumers in Singapore were facing challenges paying credit card bills, while 20 per cent encountered difficulties paying their utility bills. These consumers in Singapore were also found to be taking steps to manage their financial challenges, with 22 per cent reducing their expenditure on non-essentials, 22 per cent saving more, while 17 per cent had started a personal budget.
The survey found that since the start of the pandemic, top priorities for businesses surveyed include the health and safety of their employees and customers, as well as adjusting their operations to ensure business continuity. The pandemic could potentially add US$440 billion to credit costs in Asia Pacific and organisations are utilising digital solutions to manage customer credit risk. 25 per cent of Singapore based respondents shared that they were planning to use on-demand cloud-based decisioning applications, as well as Policy Rules (25 per cent), and Automated Decision Management (24 per cent), solutions that help businesses effectively determine which consumers can be safely extended credit. 69 per cent of Singapore businesses surveyed also indicated that they were allocating a budget in the next 12 months towards enhancing their analytics capabilities to assess customer creditworthiness.
78 per cent of organisations in Singapore are using artificial intelligence (AI) to cope with uncertainties in today’s marketplace while 79 per cent are leveraging machine learning. These are higher than the global figure of 69 per cent. The solutions to assess and manage customer credit risk most commonly used by organisations within the four sectors surveyed in Singapore comprise Decision Management (45 per cent), AI (41 per cent), and Behavioural Profiling (40 per cent).
“With COVID-19 impacting us in the foreseeable future, we anticipate digital transactions to form the bulk of interactions between consumers and businesses. However, businesses should also recognise the impact of COVID-19 on financial well-being that could potentially see customers facing increasing challenges with monthly credit obligations,” said Mohan Jayaraman, Managing Director, Southeast Asia & Regional Innovation, Experian Asia-Pacific.
“This trend is likely to have a lasting impact on consumer purchase behaviour in the long term. As more consumers go online, their digital trail creates an invaluable repository of data that can serve as a source of alternative data that businesses could use to gain customer insights and credit worthiness. Businesses that invest in analytics capabilities will be in a position to leverage data-driven decisioning that can not only reduce their risk exposure, but better engage digital consumers,” he added.