McCarthy Hatch, a leading tech-enabled financial services consulting firm, has officially announced the launch of its innovative technology called FSAi, which is designed to help financial institutions proactively identify potential consumer risk before it escalates and causes regulatory penalties.
More on the stated technology would reveal how it is a proprietary risk engine that continuously monitors regulatory changes, and at the same time, analyzes their impact on consumers. Markedly enough, this it is able to do by employing advanced algorithms and data analytics, both coming together to help the solution deliver precise and actionable insights drawn from consumer sentiment.
You see, at launch, the technology in question monitors the sentiment data of more than 150 million banking customers, giving financial institutions comprehensive insights to enhance their compliance efforts and reduce the risk of consumer harm. Such a comprehensive system, like you can guess, makes it possible for finance companies to stay ahead of regulatory challenges, proactively manage risks, and maintain customer trust, as privacy and data protection remain top priorities.
Another detail worth a mention here is rooted in how the new FSAi solution integrates seamlessly with existing systems, all for the purpose of enhancing compliance and risk management strategies by delivering unparalleled accuracy and efficiency.
“As the regulatory landscape becomes more complex, FSAi stands out as a strategic solution, allowing consumer finance companies to not only stay compliant but to address issues before they turn into larger risks proactively,” said Asaf Buchner, CEO of McCarthy Hatch. “We’ve made the integration of FSAi seamless and efficient, providing consumer finance companies with the tools they need to access precise, actionable insights from day one.”
The product launch also comes at the heels of a recent survey where it was revealed that, during the year 2023, Auto Finance Companies are showing a significantly higher concentration of financial harm indicators, as compared to other auto loan providers, such as banks, credit unions, and captives.
To expand upon that, these companies tend to exhibit eight times more indications of consumer harm at origination compared to traditional lenders. Furthermore, during the servicing phase, the said organizations display over 11 times more indications of consumer harm per $1 of outstanding loans, compared to other loan providers.
Next up, we must dig into the fact that Credit Acceptance Corporation, Westlake Services, and DriveTime / BridgeCrest consistently show the highest concentrations of potential consumer harm, with major issues like insufficient rate disclosures, predatory APRs, and repossession mismanagement.
Among other things, the report discovered how, even though non-bank finance companies like CAC dominate the negative spotlight, traditional lenders like banks, credit unions, and captives are not immune from regulatory scrutiny. Hence, it mandates a need for institutions to enhance transparency and improve compliance measures to avoid similar issues.
Beyond the report, FSAi’s launch also delivers a rather interesting follow-up to a decision from Consumer Financial Protection Bureau (CFPB), a U.S. agency responsible for consumer financial protection. Basically, CFPB has ordered consumer relief which exceeds $19 billion, making an estimated 195 million consumers eligible for relief. Not just that, the authority has also imposed civil money penalties totaling upto $4.8 billion.
