Default occurs when a client, whether an individual or a business, fails to meet a financial obligation within the stipulated deadline. This situation directly impacts a company's financial health, leading to issues such as revenue loss, increased operational costs, and reputational damage. To minimize these risks, it is essential to adopt prevention strategies and responsible credit policies.
In this context, biometrics and artificial intelligence (AI) have emerged as important tools for improving credit granting analysis. These technologies enable precise identity validation and an in-depth analysis of the customer's profile, reducing fraud, registration errors, and strengthening trust between businesses and consumers.
Below, we'll explain the main strategies that the financial sector can adopt to avoid default and grant credit more securely.
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How to prevent default in credit granting
Defaults can have various causes, but it is often directly linked to the client's financial situation. Therefore, companies must carry out a detailed analysis of economic and behavioral factors that indicate the likelihood of non-compliance with the contract.
Before granting credit, it is essential to consider:
- Credit score: a score assigned to the client based on their history of debts and payments over time. A low score may indicate a higher likelihood of default, while a high score suggests a more reliable profile.
- Socioeconomic profile: information about the client's socioeconomic profile can help identify patterns that indicate higher vulnerability to default. Data on income, occupation, and lifestyle allow for more secure and strategic credit allocation.
- Payment capacity: by analyzing the client's proven income and existing debts, it is possible to determine whether they are able to meet their commitments.
In addition to these factors, the client's consumption behavior and behavioral data must also be taken into account.
Technology in reducing defaults
With the rapid pace of digital transformation, organizations are increasingly focused on adapting to technological advancements to enhance operations. In the financial sector, this trend is even more evident, as technology plays a strategic role in risk management. Check out the main ones:
- Artificial Intelligence and Machine Learning Algorithms: these tools analyze vast amounts of historical data to detect complex patterns, enabling the accurate prediction of potential defaults.
- Transactional Monitoring: tracks client transactions in real time to identify risky behaviors and generate alerts when credit limits are close to being exceeded.
In addition to these technologies, biometrics also play an important role. Facial and fingerprint recognition can be performed using APIs and SDK. The BioPass ID platform facilitates this process, offering biometric solutions that reduce the risk of fraud.
Solution for secure credit granting
BioPass ID brings an innovative and secure approach to the customer onboarding and registration process. One of its key features is identity verification through facial matching, which compares the user's selfie with the photo on the provided document.
The platform validates the user's identity with multiple authentication factors, preventing fraud such as document forgery and identity theft. Another point is that the solution provides an additional layer of security and precision to any risk analysis system.
Initially, it is necessary to connect BioPass ID's APIs and SDKs to the company's platform. This connection enables biometric verification, authenticating the applicant's identity through facial or fingerprint recognition.
Biometrics in mitigating default risks
Biometrics is a differentiator when it comes to granting credit, bringing more security and efficiency to companies in the financial sector. By integrating solutions like BioPass ID, organizations can reduce fraud risks, ensure the authenticity of applicants, and optimize credit analysis with more reliable information.
Combined with artificial intelligence, biometrics prevents scams and speeds up the credit granting process, enhancing the customer experience. For more information, talk to a specialist. If you prefer, purchase the solution directly here.
