Our previous articles established the need for a device financing risk management (DFRM) platform. For businesses that want to make device financing risk-free, there could not be a better solution than to choose a DFRM platform that eliminates the risks associated with lending devices, especially in geographies devoid of a centralized credit-scoring system. But when analyzing multiple DFRM platforms, it is important to consider how it fulfills your business expectations, and finding the right fit for your device financing needs is the key.
What can set you up for success on your device financing journey as a financing organization, an OEM, or a telecom carrier, is the offerings and features of your chosen DFRM platform. This article will discuss the key features of a comprehensive device financing risk management platform.
1. Fraud detection
One of the essential and honestly non-negotiable features of a DFRM platform is its ability to detect fraud effectively. From predicting potential defaults due to frequently delayed payments to detecting SIM swaps (when the device is financed as a hardware + SIM bundle), fraud detection can help financing organizations stay one step ahead of the game.
With multiple fraud detection mechanisms built into the DFRM platform, including scheduled compliance checks and instant alerts, fraud detection can be expedited, and fraud can be largely prevented.
2. Reliable payment processing
Okay, it may sound basic, but more often than not, a faulty or patchy payment system or gateway can literally ruin the rep, not just for the customers but also for the financing organizations. The ideal DFRM platform should be integrable with a secure payment processing system that can handle multiple payment requests at any given time and has options for users to add multiple payment methods to simplify payments (and, in turn, reduce the chances of defaults).
Furthermore, a comprehensive DFRM platform with a versatile payment processing system can help maintain a log of previous payments and failed transactions and create a better customer/user experience.
3. Collections management
One of the sacrosanct (if we dare say so) features a DFRM platform must have is collections management. When device financing organizations can manage delinquent accounts that have defaulted EMIs, they can recover outstanding payments and reduce losses caused by payment defaults. Like we always like to iterate, the DFRM platform must be your virtual recovery agent.
4. Portfolio management
To make device financing a lucrative model, it is important to understand the cash flow and the typical patterns of device defaulting. A key feature to help understand this is having inbuilt portfolio management tools to track the performance and effectiveness of device financing and assess risks based on historical data to make smart business decisions.
5. Reports and alerts for enhanced compliance
Having real-time insights into the device financing portfolio also entails having comprehensive reporting and analytics in place. With a trusted DRFM platform, device financing organizations can obtain detailed reports into possible frauds, upcoming payments, incomplete and failed payments, and status updates of payment reminders. Furthermore, with alerts, any fallouts can be detected and remediated quickly, helping predict future frauds and defaults.
6. Linked to credit scoring
In geographies where centralized credit scoring is available, the DFRM platform needs a robust credit scoring system to determine the creditworthiness of potential borrowers. This can minimize the risks of defaults before they happen.
7. Phased activation and locking
A unique feature that makes a DRM platform stand out is its understanding of financing organizations’ dynamic business needs. This includes:
- Phased locking: A defaulted device is not locked at the first default but is locked in phases, giving customers ample time to pay and use devices.
- Group-specific settings: When devices are deployed in a specific geography, country, or certain demographic, selective policies can be applied to adhere to local compliances.
- Ready-to-ship devices: For organizations handling large volumes of device financing, having the devices ready-to-ship in the warehouse without actually starting the payment clock is a great feature to have. This eliminates the need for manual enrollment on the DFRM platform.
A comprehensive device financing risk management (DFRM) platform essentially needs to empower device financing organizations to make it a profitable endeavor. There is no better solution than a DFRM platform to make informed financing decisions and curb the risks associated with device financing.