Digital Scorecards: Making Travel Quick, Seamless and Affordable
November 14, 2019
CredoLab's Chief Data Scientist on How Banks and Consumer Lenders Can Leverage Data Analytics for Business and Social Impact
The new generation of travelers are planning their holidays on loans, preferably with a repayment option stretched over a few months to a year. According to Atmosphere Research Group, 41% of travelers are interested in using installment payments for trips that cost US$200. In fact, Thomas Cook in its 2019 summer travel trends reported a 50% to 60% jump in travel loans. What does this mean for online travel companies? In order to maximize customer experience, it is crucial to make travel convenient, quick and seamless.
Littler wonder, online travel companies across the world – from Expedia and Virgin Holidays to Make My Trip and Ease My Trip in India – are offering “Fly or Book Now and Pay Later” options to better the booking experience while making credit more inclusive. With more than 100 million Americans to go on a family vacation in 2019, offering pay at a later date option is a sure-fire way to enhance customer experience and boost brand value. However, offering easy financing options is just half the battle won. The other half requires travel lenders to accurately assess creditworthiness and probability of default to reduce risk and cost. How can they do it?
Artificial Intelligence (AI) and Machine Learning (ML) infused credit scoring can help companies create unique scorecard models based on alternative smartphone data to authenticate credit-worthiness and offer easy financing options to all customers, particularly those without credit cards. In fact, in the present day scenario, when 94% adults own a mobile phone and 90% use the internet, using digital footprints to authenticate credit-worthiness not only helps capture customers with thin credit histories, but also those who avoid their holidays and trips due to skyrocketing airfares, increased hotel rates and other budget concerns.
Next-gen credit scoring: A win-win for travel companies and travelers
AI and machine learning can be leveraged to consistently improve digital scorecards and gain access to data that is not represented in traditional credit reports. This helps in faster decision making, giving lenders greater confidence and allowing consumers to make spontaneous holiday plans. Here are two ways AI-enabled credit scoring can help online travel companies offer instant loans with pay later options to all customers:
- Accurately assess borrower’s intent and ability to pay: Unlike traditional scorecards that consider data from sources such as credit bureaus to assess creditworthiness, digital scorecards use anonymized, smartphone metadata gathered from applications, calendars, emails, contact, video and audio to evaluate credit applications. Underpinned by machine learning algorithms, the credit score analyzes repayment data and behavioral patterns to accurately assess customers’ willingness and ability to repay. The result: Travel companies can offer instant gratification through secured loans on low credit interest while mitigating chances of fraud.
- Expand to a new market: In India alone, 50 million people are estimated to travel abroad in 2019. With travel becoming a necessity, especially for the millennial customer, digital scorecards help offer easy booking as they quickly analyze loan applications and generate scores in real-time. This not only helps in faster time-to-yes but also enriches customer experience.
As young millennials increasingly look for affordability and accessibility of travel credit, digital scorecards can enable travel companies to offer loans with a less cumbersome procedure while providing predictive insights into the borrower’s affluence. This will pave the way for sustained profits for companies all year-round while making travel super convenient and attractive for the consumer.