Amount's Digital Banking Infrastructure

July 20 , 2020

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The banking industry is changing more rapidly than ever. Many financial institutions have been slow to keep up with advancing technology and the ever-increasing connectivity of their customers’ daily lives.

The number of bank branches in the U.S. has declined by 7% over the past five years according to a recent study, and the current pandemic has highlighted the need for a much more robust digital banking infrastructure. However, moving to digital channels can open your bank up to an increase in fraud risks as well as require millions of dollars of infrastructure investments.

When you’re operating in a purely digital environment and are unable to fall back on traditional branch-based means of authenticating an applicant, you need sophisticated digital means to not only detect and screen for fraud, but also prevent it through treatment strategies in real-time.

How does the Amount 360 digital banking platform work?

Amount has a solution for this problem. Our Amount 360 platform can enable banks to offer consumers a full suite of digital banking products within months, not years. The Amount 360 platform can quickly integrate into your existing banking infrastructure without having to replace your core or legacy systems, giving you the tools necessary to complete each of these processes digitally. Let’s dive a little deeper into how it all works.

Our current solutions include point of sale, personal loan, deposit account, and credit card products. But how does this work? There are four basic processes that need to be accomplished when issuing a digital financial product:

  • Application Capture 
  • Decisioning
  • Information Verification / Fraud Prevention
  • Booking 
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Risk Assessments

Data Intake

Information from an application is automatically ingested as a JSON file. With a simple lightweight API integration, the platform can source data from any location including the web, mobile apps, in-branch, and over the phone.

Rules Engine

Amount’s Rules Engine then creates a unique risk profile for each applicant. Risk identification happens in real-time using data from the application, third-party sources, and proprietary fraud models. The Rules Engine is available out-of-the-box or can be customized to your business needs.

Multi-Layered Fraud Defenses

Amount’s Multi-Layered Fraud Defenses utilize state-of-the-art machine learning, data analysis, and highly trained specialists to detect and prevent fraud as early as possible. Key features include Amount’s Fraud Score, social network linking, device fingerprinting, and case management.

Data Enrichment

Amount provides access to external data sources to enrich application data for use in rules, resolution strategies, or case management. Choose from 15+ pre-configured data vendor sources or add additional data feeds.

Digital Mitigations

Resolutions Engine

The Resolutions Engine facilitates applicant, agent, and system workflows that mitigate the risks identified by the Rules Engine. Configurable strategies provide the flexibility to hand-pick the suite of tools and workflows triggered by each rule.

Customer Dashboard

If the Resolutions Engine triggers workflows to verify information, Amount’s Customer Dashboard can minimize or eliminate the need for manual intervention by allowing applicants to complete the verification process on their dashboard. Required workflows displayed on the dashboard are tailored to each applicant’s risk profile. Applicants use single sign-on (SSO) to access the Customer Dashboard from any device.

customer-dashboard

Management & Optimization

Agent Portal

The Agent Portal standardizes and expedites any necessary manual processes with intuitive pre-configured workflows for agents. Bankers and back office support agents can use the Agent Portal to assist an applicant in person or over the phone. Key features include role-based workflows, queue management, automatic work assignment, manual activity logs, and an administration dashboard.

Session Results

Once a verification session is completed, Amount will send a JSON data package summarizing the results. This package contains information regarding the risks triggered by the Rules Engine, outcomes of the mitigation workflows from the Resolutions Engine, the final stage reached, and a Pass/Fail status for the session. The applicant receives a completion message and is directed to an endpoint of your choosing.

Partner Portal

Amount offers a servicing platform called Partner Portal, an easy-to-use solution for monitoring and managing your products. Through Partner Portal your team will be able to view program documentation, business reporting, and compliance escalations, as well as access user management functionality and a help desk. This white-label platform is also optimized for mobile so tasks can be managed on-the-go.

amount-partner-portal

The Amount Difference

Amount 360 is a cloud-based fraud and verification platform designed to bring your banking products into the digital age. Our powerful solution enables your business to stand up fully digital products quickly, without the need for costly internal development. 

The need for a digital banking infrastructure is here. Right now. The Amount 360 platform can quickly integrate into your existing banking infrastructure without having to replace your core or legacy systems, giving you the tools necessary to complete each of these processes digitally and catapult your growth.

DISCOVER AMOUNT 360

Footnotes

The information in this post is provided for informational and advertising purposes only. Amount's service may vary for each customer. For more information, email us – brand@amount.com.

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AJ Anderson

AJ joined Amount as a Technical Copywriter in July 2019, working as a member of the Design team. He grew up in the small town of Hayward, Wisconsin, and graduated from UW-Madison with a degree in English. Since then he has pursued a career in Technical Writing with a number of software companies in the Chicago area.

Amount's Digital Banking Infrastructure

Posted by AJ Anderson on July 20 , 2020
AJ Anderson
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Generations of digital natives are finding new ways to buy-now, pay-later. Consumers have no shortage of financing options at their fingertips as e-commerce continues to evolve. Are banks responding?

 

There are few spaces that empower consumers more than the online shopping cart. Tailoring a shopping experience to your desires, purchasing the products you need with a click of a button, and quickly financing items has become a must-have for digital shoppers. As these new generations of consumers rely on new channels of unsecured lending, point-of-sale financing has become a boon for merchants, fintechs, and lenders alike.

 

So why is point-of-sale-financing garnering so much attention right now? Let’s take a look.

What is point-of-sale financing?

Point-of-sale financing enables consumers to break up payments for certain items over a period of time. Merchants provide a way to purchase a product now while the consumer pays for the product over a period of time determined by the lender. Lending at the point-of-sale is also known as open-loop brand credit cards, closed-loop store credit cards, and retail installment loans.

 

Growing demand for this type of unsecured lending coupled with the growth in e-commerce purchasing over the last two decades has created an opportunity for financial institutions. Filene Research Institute estimates the total point-of-sale financing market at $391 billion, equating to approximately 3.5% of annual consumer spending.

How Point-of-Sale Financing Works

Point-of-sale financing holds unique value for consumers, lenders, and merchants alike. Cloud-based solutions empower merchants to offer customized financing options for purchases both online and in-store.

How it works

  1. The consumer selects financing options while finalizing the purchase.
  2. The consumer’s information is securely passed from the merchant to the lender for loan decisioning.
  3. A decision is made by the lender and the consumer is presented with options for point-of-sale financing on their purchase.
  4. The consumer chooses the financing terms that are right for them and purchases the item.

Pretty simple, isn’t it? Now that we’ve uncovered how point-of-sale financing works, let’s dive deeper into why it makes sense for lenders and merchants to implement a solution for their customers now.

Data Drives Demand

The most compelling reason to implement a point-of-sale financing solution lies in its promise to deliver for future generations of borrowers. As the technology continues to adapt to better purchasing processes, application user experiences, and evolving e-commerce business models, the demand for this type of lending is clear already.

According to McKinsey Consumer Finance pools, outstanding balances on point-of-sale financing nearly doubled from $49 billion in 2015 to $94 billion in 2018 and is expected to reach upwards of $160 billion in 2021. The channel currently accounts for nearly 10% of all unsecured lending and is growing at an unprecedented rate.

Market Factors

2020 has seen a number of point-of-sale financing related partnerships and entries into the market. From AliPay announcing its minority stake in Klarna to Shopify announcing its foray into installment payments, the market has decided: point-of-sale financing is here to stay and will continue to shape unsecured lending for years to come.

Source: McKinsey

Consumer behavior tells the most important market factor driving point-of-sale financing’s rise. Filene Research Institute asserts that nearly 20% of millennials expect to draw or increase unsecured lines of credit for renovation/repair products and 13% of millennials will take on additional debt for electronics over the next few years. Consequently, there is increasing interest in unsecured lending options, whereas more common lending types like auto and home loans rank far lower on the priority list for younger generations.

Generations Y and Z are emerging as a major market consumer for point-of-sale financing, further proving the future-proof opportunity here. These cohorts are familiar with credit from an early age due to the subscription economy they have grown up in. The need is there too. The annual salary of millennials is approximately 20% lower than that of the baby boomer generation when they were the same age, after adjusting for inflation. Net worth of Americans ages 18 to 35 has decreased by 34% since 1996. These consumer factors make point-of-sale financing a must-have for banks in their unsecured lending playbook.

Point-of-sale financing for banks, credit unions, and financial institutions

“Fintech is eating the world,” opined Forbes contributor Alex Lazarow in mid-2019. This sentiment is true now more than ever as we head into the second half of 2020. E-commerce giants like Alibaba and Shopify are growing their offerings and proving to be a viable challenger to banks, credit unions, and financial institutions across the globe.

In November 2019, McKinsey asserted that “traditional players exploring a play in POS financing have a limited period to enter the market and grow. In 18 to 24 months, laggards either will be unable to compete, because most merchants will already have POS financing partners, or will need to pay a heavy premium to get into the market.”

So how can your financial institution thrive in this growing market? Let’s identify the four business models that financial institutions are employing today:

Build: The end-to-end solution model

Financial institutions can opt to build their own end-to-end solution for point-of-sale financing. This involves a large investment in building the product offering themselves and usually lengthens the go-to-market timeline, which could prove even more costly in such a burgeoning segment of unsecured lending.

Buy: The platform-partnership solution

Financial institutions can partner with technology platforms to enable merchant clients to drive sales by offering an end-to-end solution that could include decisioning, verification, origination, and servicing. This solution lets the partner do the heavy lifting while allowing financial institutions to focus on growing their active or prospective merchant relationships.

The marketplace model

This model enables banks to compete in a marketplace of lenders and merchants. Financial institutions can tailor their terms and conditions to remain competitive in the market while gaining easier access to the consumer with little-to-no upfront investment.

What is the right solution for my financial institution?

The growing demand for point-of-sale financing is clear and present. While the long-term trajectory of the unsecured lending product remains somewhat unknown, the same principles that have guided banks for decades apply. Tailoring your point-of-sale solution to your risk profile has never been easier with multitudes of options in-market. Mitigating the fraud that continuously impacts banks remains a challenge for those entering the point-of-sale arena.

In order to understand which type of solution is right, every bank and financial institution should start by asking the following questions:

  • Is your bank or financial institution more focused on customer experience or growing the balance sheet?
  • What type of investment is your bank or financial institution willing to make? Building a program in-house could cost upwards of $20 million as an up-front investment.
  • When does your bank or financial institution want to go-to-market? Some builds can take longer than two years, whereas most partnerships can go-to-market in a matter of months.

Consumers demand more than just a slick interface. Financial institutions require an enterprise-grade solution that combines an orchestrated front-end with back-end intelligent decisioning tools, enabling on-the-fly fraud verification and servicing tools to provide a seamless user experience. These broader demands coupled with a need for limited up-front investment and speed-to-market make Amount Pay the enterprise solution for leading banks and financial institutions.

Amount Pay is an end-to-end, cloud-based solution that empowers financial institutions and merchants to offer customized financing options to consumers. Backed by the power of Amount 360, the omnichannel solution provides the freedom to apply from the web, mobile app, in-store, or over the phone. Leverage a powerful originations engine with quick approvals for fixed-rate loans with 12 to 72 month term lengths. Improve merchant client relationships, e-commerce user experiences, and boost sales.

BUTTON: Start Financing Today

Topics: Product