Beyond Credit Defaults: Instnt Makes Lenders Fraud Proof With No Strings Attached
NEW YORK, October 16, 2023 (Newswire.com) - Instnt, the first AI-managed insurance technology platform that helps businesses shift up to $100 Million in fraud-loss exposure off their balance sheets so they can say yes to more customers, has emerged as a vanguard for the lending sector in its battle against first-party fraud and credit defaults. According to the FDIC, the Federal Reserve, and Moody's, as of 2022, first-party fraud-related credit default losses cost institutions upwards of $32 billion. Instnt’s patent-pending first-party fraud loss underwriting and its associated proprietary fraud loss reduction technology have raised the bar in the industry's fight against this pervasive threat that results in 25% or more of all consumer loan receivables being charged off.
With mortgages, student loans, credit cards, payday loans, lease-to-own, and buy now pay later products, lenders are catering to a growing audience of consumers, including the thin-file demographic of millennials, Gen Z, Gen A, and the unbanked. As with all consumer lending use cases, some percentage of borrowers tend not to pay the loan back, while retaining the goods and services purchased with their loans. First-party fraud refers to credit defaults from genuine applicants who use their own identity to secure loans with the intention of not repaying, missing all payments from the first payment onwards. This is in contrast to credit defaults from genuine applicants who fail to continue to make payments as a result of changes in their economic circumstances. Often lenders tend to differentiate between the two by waiting up to 120 days from the first payment missed date to carry out collection activities and reach the borrower to negotiate a settlement, the success of which determines if the transaction is categorized as fraud or not. The friendly nature of the fraud problem – that genuine customers are choosing to defraud the business – makes it hard to eradicate. Instnt’s patent-pending solution employs a variety of new signals generated by its lightweight technology layer that sits on the lender's website or mobile app UI, which works in tandem with Instnt's SaaS cloud services to reshape the expected losses from first-party fraud, shifting the residual losses to the insurance market through its exclusive partnerships with A+ to A rated insurance carriers that issue Instnt's policies on the basis of its risk underwriting.
The results speak for themselves. Instnt has helped lenders eliminate first-party fraud losses through its unique insurance technology while doubling revenues by letting more fundable good customers in, significantly reducing false declines and customer friction drop-offs. Instnt’s underwriting and liability shifting capabilities move the losses out of current organizational risk management silos and into a customer consortium risk pool, which Instnt manages and aims to collateralize and securitize.
By leveraging Instnt, lenders are able to financially include and fund new customers that they would have otherwise rejected, wasting precious marketing spend to bring those customers to their door in the first place. Consider the use case of a leading microlender that was losing roughly $1.5M to first-party fraud a month, while rejecting over half of all customers that they brought to their doorstep. Instnt’s technology was able to reduce their fraud exposure by 65% while shifting 100% of their residual balance sheet fraud losses and increasing their funded acceptance rate to over 75% from the original 30% mark, generating tens of millions of dollars in revenue and increasing ROIC on loans to 1.5x. Similarly, by partnering with Instnt, a popular digital bank's lending business opted to shift $45M in first-party fraud losses off its balance sheet, improving its funded account approval rates by 70% and gaining the ability to grow its top-line revenue by approximately $400M. With Instnt, leading lenders saw their return on invested capital meaningfully improve and their risk capital reserves significantly reduce.
"We want to make it easier for lenders to bring their innovative products to consumers at scale without having to worry about friction and fraud losses," stated Sunil Madhu, Instnt's Founder and CEO. "Buy our new fraud insurance solution and protect your growing business from losses while saying yes to more good customers."
About Instnt
Instnt Inc. is a venture-backed public benefit corporation founded and operated by serial entrepreneur, Sunil Madhu, founder and former CEO of Socure. Instnt is on a mission to price, insure, and pool fraud losses, bringing frictionless inclusion and acceptance experiences to businesses and their customers everywhere. Instnt sells its SaaS insurance technology solution to financial institutions, lenders, fintech, banks, and credit unions across North America. For more information, please visit www.instnt.org.
Source: Instnt
