Data from Multiple Sources Make Possible Business Credit Decisions with Greater Confidence and Reduced Risk
LexisNexis® Risk Solutions recently released a report introducing its Scalable Automated Linking Technology (SALT) that is foundational to its credit, fraud, AML, and other risk assessment products for small businesses. The report charts the current state of assessing risk on small businesses applying for loans and other financial products, including the complexities and differences between small businesses and larger companies from the perspectives of both small business owners and financial institutions and other lenders.
In explaining the difficulties for small businesses of getting approved for credit, the report, titled Gain a Larger Share of the Small Business Market: Confidently Assess Small Business Risk Using Scalable Automated Linking Technology (SALT), describes the uniquely challenging problem of record linkages between business data sources.
Traditional approaches to data aggregation and linking treat businesses as they do consumers—as one discrete entity with clearly defined boundaries. However, businesses are not people—a business can exist in multiple locations, as multiple entity types, with multiple owners and executives, and even “die” and come back to life. Traditional, deterministic record linkage—also known as data matching—uses “if/ then” logic to assign a series of grades and other confidence factors that indicate the degree to which the content in each field can be considered the same as, similar to, or different from content in the customer-supplied input record.
Business record linkage, though, is rarely straightforward. When establishing links between business records, deterministic record linkage leads to a number of problems. To begin with, every data quality issue (such as transposed letters, misspellings, “noise” words, etc.) requires a new rule. This can be illustrated with a simple example of the use of the word “corporation” in a company name. LexisNexis Risk Solutions has identified over 30 variations in spelling and abbreviation, for example. To achieve accurate linkage (i.e., it does not incorrectly combine data and/or miss important data points), deterministic record linkage programs require hundreds of rules, making the code time-intensive to build, run, and maintain. In the best case, these costs are passed on to customers; in the worst, the rules are neglected until the linkage deteriorates noticeably.
Ben Cutler, senior director, Small Business Risk Management at LexisNexis Risk Solutions, commented: “We want to help financial institutions, communications companies, financial service providers, and other small business lenders get the most accurate data available on small businesses applying for credit or other banking services. We believe that accurate data is the basis of smart decisions, but the information gap on small businesses is vastly wider than on consumers. This is one reason why the small business sector represents a vastly untapped market.”
LexisNexis Risk Solutions has patented a new way to combine business data sources that leverages the most sophisticated record linkage approaches in use today. Scalable Automated Linking Technology (SALT) is a proprietary statistical linking model used to address common data integration tasks, from data profiling and cleansing to record linkage. In contrast to traditional, deterministic record linkage, which requires hand-coded user-generated rules, the SALT probabilistic algorithms employ statistical concepts such as specificity and clustering to determine the relevance and weight of identifying elements.
SALT algorithms learn through the introduction of new data. Each month, LexisNexis Risk Solutions performs record linkage on its entire database, comprised of nearly 65 billion records from more than 10,000 sources that resolve to approximately 45 million business entities. Updates and new content are continually added and factored into the monthly linkage process. The end result is both a more precise resolution on the small business entity and the broadest recall of the disparate data elements associated with that entity.
Noted Cutler, “This report points to a major opportunity for financial institutions, financial services providers, communications companies, retailers and many other businesses to assess risks associated with their small business customers, from credit risk to the risk of fraud or money laundering operations. Confidently assessing the risk of small businesses enables companies to grow market share in this segment, which makes up more than 99 percent of all U.S. businesses they serve. And it furthers our goals of improving transparency and compliance to equalize services and opportunities around the globe.”
For more information or to see the report, please reach out to firstname.lastname@example.org.
About LexisNexis® Risk Solutions
At LexisNexis Risk Solutions, we believe in the power of data and advanced analytics for better risk management. With over 40 years of expertise, we are the trusted data analytics provider for organizations seeking actionable insights to manage risks and improve results while upholding the highest standards for security and privacy. Headquartered in metro Atlanta, LexisNexis Risk Solutions serves customers in more than 100 countries and is part of RELX Group, a global provider of information and analytics for professional and business customers across industries. For more information, please visit www.lexisnexis.com/risk
Jean Creech Avent
Director, Media and Analyst Relations
LexisNexis Risk Solutions