illion introduces new transaction scores

author-avatar By on May 21, 2021
illion introduces new transaction scores

A new service from credit reporting agency illion allows financial institutions to better scrutinise customers' transaction data.

The new 'Transaction Risk Score' more closely scrutinises cash use patterns, income frequency, and loan repayment trends, and forms part of the wider comprehensive credit reporting method.

One red flag identified in the new transaction score is a customer on a prepaid phone plan, according to illion's Head of Modeling Barrett Hasseldine.

"For a consumer to be given a post-paid mobile service, they must have successfully passed a credit history check," he told Savings.com.au.

"As such, individuals with bad credit histories disproportionately use pre-paid mobile phone plans."


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Another red flag identified includes customers withdrawing large sums of money via ATM on payday, which could indicate spending on gambling and other vices.

"The score identifies individuals who are withdrawing cash at ATMs on payday and reduces their score as a result. If the individual transfers money to a different bank account electronically, their score is unaffected," Mr Hasseldine said.

illion CEO Simon Bligh called the new transaction score a "game changer".

"Banks and credit providers hold a raft of data that shows both the financial state and spending behaviour of their customers. What the score does is mine this data and make sense out of it in a straightforward manner," he said.

“An example of an insight we have developed is that there is a strong correlation between an individual’s risk and the amount of their salary they pull out of the ATM on pay day.

"We have developed thousands of these insights."

The new transaction score forms part of illion's open banking rollout, in which the agency is one of the few institutions to be granted data accreditation. 

Mr Bligh also said the transaction score can also lead to cheaper home loans.

“There are upsides for consumers as well as credit providers, with the key insights needed to unlock more tailored lending terms and conditions and a broader range of products through enhanced credit underwriting and more suitable loan pricing," he said.

“This is good for financial institutions who can price more efficiently, lend more responsibly and do so at lower cost, and it is good for consumers who will have an expanded choice and get the products that are right for them, quickly.

"It’s one of those rare innovations where everybody wins."


Photo by Tim Mossholder on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Harrison joined Savings in 2020. He is an experienced journalist, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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