Point Predictive: Building a New Level of Lending Confidence

While the occurrence of defaults and fraud is relatively rare, they still have a substantial impact on lenders. In the automotive lending space, for example, data indicates that defaults due to misrepresentation and fraud on loan applications rose to $7.7 billion in 2021, a 5 percent increase compared to 2020. These increased losses were largely driven by first-party schemes such as paystub forgery and employment fabrication. There are now many organizations and websites that provide falsified paystubs and verify false employment claims and income for a fee. Some organizations create and sell synthetic identities and unscrupulous credit repair agencies that help consumers falsify their qualifications. Moreover, lenders must balance their ability to protect themselves from these losses while at the same time delivering on the primary demand of legitimate consumers – quick and easy access to loans. To do this, they need to automate as many parts of the loan decision as possible. This is where Point Predictive is creating a difference. Point Predictive is a key component in enabling this decision automation. Those with a low likelihood of risk, as identified using a scoring solution from Point Predictive, can safely be cleared for fraud without producing documentation such as paycheck stubs, or utility bills for proof of residency, etc. Point Predictive is a leader in decision automation and risk management for the financial services industry. “We excel in helping lenders fund more loans by streamlining the loan origination process and improving the borrower experience. We do this by dramatically reducing the need for onerous documentation and proof paperwork, which can cause a lender’s best prospective customers to abandon the lending process,” begins Timothy J. Grace, CEO, Point Predictive.

Many lenders require applicants to provide documentation and proof paperwork to guard against the tiny percentage of applicants who fabricate or misrepresent data about themselves on lending applications. While false information that will lead to payment defaults and fraud are only present on less than three percent of lending applications, in many cases 100% of applicants suffer the inconvenience of these requirements. At Point Predictive, the company’s team is passionate about getting the 97% of consumers who supply legitimate application information the loans they need quickly, efficiently, and without requiring onerous proof documentation such as paycheck stubs and proof of residence. In fact, Point Predictive is one of the best-positioned companies to identify truthful applicants because of its legacy and corporate DNA that are founded in the artificial intelligence (AI), unique data assets, and data science required to effectively identify the relatively rare cases of misrepresentation or fraud on loan applications. “We do this using patented advanced artificial intelligence and machine learning. Our unique approach combines this artificial intelligence with a unique, nationwide data consortium and the deep, practical experience of our risk analysts,” adds Timothy.

Each application receives a score that identifies for lenders the small subset of applicants from whom they will ask for more documentation, streamlining most applicants through the lending process without delays. The company’s team has built these types of scores for more than twenty years across the financial service industry. Most consumers have likely experienced the benefits of these scoring solutions either in the protection of their credit cards, mortgage, automotive, or personal loan applications.

Adding Convenience and Confidence

What really makes the company stand out is the fact that Point Predictive is the only solution provider that assesses the risk of fraud and misrepresentation resulting in default at the loan application level across all risk types including Identity, Employment, Income, Collateral, and Straw Borrower (i.e., borrowing for someone else’s use). Point Predictive’s solutions utilize a consortium of data that contains more than 110 million historical applications. The consortium includes a wealth of risk information not available together in any other source, including known loan performance (whether there was a payment default or fraud reported) for more than 62 million U.S. consumers (approximately 1 in 4 U.S. adults and 1 in 3 U.S. adult consumers with some type of credit history) as well as risk information on thousands of third parties such as 150,000 car dealerships.

Using this historical information, the team builds sophisticated algorithms that accurately identify whether the information on a new application is likely truthful or suspicious. Building a rich data consortium to compete with Point Predictive will take other vendors entering the space years, if not a decade or more, just to reach parity with the company’s existing data assets.  “Our solutions consider whether a particular consumer has been seen in the consortium before and compares the current application information (such as income, employment, residence, phone numbers, etc.) to what this consumer has previously reported as well as to historical patterns of applications that performed or resulted in default. Thousands of data elements and calculations are considered resulting in highly accurate scores,” explains Timothy.

Transforming the Lending Experience

Point Predictive was originally formed to fill a void in risk management solutions in the automotive lending space. The founders of the company (Tim Grace and Frank McKenna) were approached by executives from the auto industry who were familiar with the success of prior companies that the founders had launched and later sold. In 2017, Point Predictive launched the fraud consortium and their flagship product Auto Fraud Manager which delivered on their promise to bring a data consortium and advanced risk scoring to the industry. Executives representing more than 50 percent of the U.S. auto origination market attended the first industry roundtable meeting where this solution was presented, and they expressed universal enthusiasm and excitement that a leading-edge fraud risk solution would be available to address the auto industry’s concerns.  Since that time, Point Predictive has grown rapidly and expanded on its solution set; delivering advanced solutions to solve risk problems beyond auto, to mortgage lenders, personal lenders, student lenders, and retail finance.

Point Predictive, over the last 5 years, has completely transformed the risk management solutions automotive lenders and dealers have available to them. The company today focuses to ensure the small number of misrepresented applications are targeted while enabling the majority of truthful applications to get funded quickly without imposing onerous documentation requirements on dealers or consumers.  We believe that buying a car should not be like buying a house.  As Point Predictive CEO, Tim Grace recalls, “I remember being in a car dealership a few years ago waiting for what seemed like forever for the finance manager to become available to process the deal.

When I asked what was taking so long, the general manager replied, “Well, this is not like buying a cup of coffee.” I believe it should be that easy – especially for truthful applicants and technology-driven lenders and dealerships.”

“While we are well on our way to helping lenders and dealers realize this, Point Predictive will not stop at automotive and we are already making great strides in personal loans, buy now pay later, credit cards, and other industries to enable the same frictionless, consumer-friendly lending experience,” he concludes.