Open Lending Partners with Akur8 to Enhance Predictive Lending Model

Rhea-AI Summary

Open Lending Corporation (NASDAQ: LPRO) partners with Akur8 to enhance automotive lending with accurate predictive insurance pricing models, empowering customers to expand portfolios and manage risk effectively.

Insights

Financial Analyst

The partnership between Open Lending Corporation and Akur8 presents a strategic alliance that could potentially enhance Open Lending's market position by integrating advanced risk analytics into its Lenders Protection™ platform. With Akur8's predictive insurance pricing models, Open Lending aims to improve the precision of borrower risk assessment, which is critical for pricing loans competitively while managing default risk. This collaboration is likely to attract attention from investors, as it could lead to an expansion of Open Lending's customer base, particularly among near- and non-prime borrowers—a segment that is both sizeable and underserved.

From a financial perspective, the ability to offer personalized automotive loans more efficiently may result in increased loan originations and, consequently, higher revenue streams. However, it is essential to monitor the actual performance against these expectations, as the integration of new technologies comes with execution risk. Additionally, the focus on ethical use of data and regulatory compliance by Akur8 could mitigate potential legal and reputational risks associated with data management and privacy concerns.

Market Research Analyst

Examining the broader market implications, the partnership reflects a growing trend in the financial services industry towards leveraging fintech innovations to better serve customer needs. The emphasis on speed, accuracy and transparency in loan decisioning could set a new standard in automotive lending, pressuring competitors to adopt similar technologies or risk falling behind. Furthermore, the partnership could be seen as a response to the increasing demand for vehicle accessibility among near- and non-prime borrowers, as indicated by Open Lending's 2024 Vehicle Accessibility Report.

In the long term, the success of this alliance could encourage further fintech collaborations, influencing the evolution of risk assessment methodologies across the industry. Stakeholders should consider the potential for Open Lending to capture a larger market share and the implications for consumer choice and competition in the automotive lending sector.

Economist

From an economic standpoint, the partnership between Open Lending and Akur8 could have implications for the broader economy by potentially increasing access to credit for consumers who are often excluded from traditional lending. By enabling financial institutions to better assess and manage the risk associated with lending to near- and non-prime borrowers, the partnership could lead to an increase in consumer spending on vehicles, which is a significant component of personal consumption expenditures.

However, it is crucial to consider the macroeconomic context, including economic uncertainty and potential shifts in consumer behavior. If the predictive models successfully balance risk and opportunity, they could contribute to financial stability by reducing default rates. Conversely, if the models fail to accurately predict risk, there could be negative repercussions, such as increased default rates, which could have a ripple effect on the economy. Therefore, the effectiveness of these predictive models in a real-world economic environment remains a key factor to observe.

Akur8 will further bolster Lenders Protection’s accuracy, transparency, and speed to better identify borrower risk and extend personalized automotive loans

AUSTIN, Texas--(BUSINESS WIRE)-- Open Lending Corporation (NASDAQ: LPRO) (“Open Lending” or the “Company”), an industry trailblazer in automotive lending enablement and risk analytics solutions for financial institutions, today announced a partnership with innovative insurance pricing solution provider Akur8 to complement its proprietary Lenders Protection™ platform. Akur8’s ability to produce fast and accurate predictive insurance pricing models will build upon Open Lending’s existing risk model, which can analyze 2 million borrower risk profiles and deliver a decision within five seconds or less. Open Lending customers will be empowered to respond more quickly to increasingly dynamic market conditions and safely expand their automotive lending portfolios with competitive pricing and higher-yield opportunities.

Vehicle accessibility is an ongoing challenge, especially among often-overlooked near- and non-prime borrowers, with 25% of this cohort paying over $600 monthly for a used car they purchased in 2023, up from the 8% who purchased one between 2020 and 2022, according to Open Lending’s 2024 Vehicle Accessibility Report. For financial institutions to intelligently expand their borrower pool to include these reliable individuals while managing risk and increasing return on assets, many are seeking advanced data-driven decisioning to better identify borrower creditworthiness.

“As economic uncertainty persists, we are confident Akur8 will further enhance our ability to provide lenders with the tools and insights necessary to support historically underserved near- and non-prime borrowers,” said Open Lending’s Chief Revenue Officer Matt Roe. “The addition of Akur8’s predictive modeling expertise to our over 20 years of industry experience and AI-powered Lenders Protection™ solution will allow our customers to address market dynamics faster and more effectively meet the ongoing needs of today’s borrower. This partnership also furthers our mission to expand vehicle access to more deserving borrowers and, in doing so, help our clients unlock new revenue opportunities.”

“We are thrilled to use our extensive knowledge of the insurance industry, regulatory compliance, and advanced technological solutions to bring fair decisioning processes to the automotive lending field through our work with Open Lending,” said Brune de Linares, Akur8’s Chief Client Officer. “We are committed to applying our background in machine learning transparency and ethical use of data to help automotive lenders serve borrowers with greater confidence, clarity, and efficacy.”

About Open Lending

Open Lending (NASDAQ: LPRO) provides loan analytics, risk-based pricing, risk modeling, and default insurance to auto lenders throughout the United States. For over 20 years we have been empowering financial institutions to create profitable auto loan portfolios with less risk and more reward. For more information, please visit www.openlending.com.

About Akur8

Akur8 is revolutionizing non-life insurance pricing with Transparent Machine Learning, boosting insurers’ pricing capabilities with unprecedented speed and accuracy across the pricing process without compromising on auditability or control.

Our modular pricing platform automates technical and commercial premium modeling. With Akur8, time spent modeling is reduced by 10x, the models’ predictive power is increased by 10% and loss ratio improvement potential is boosted by 2-4%.

Akur8 already serves 100+ customers across 40+ countries, including AXA, Generali, Munich Re and MS&AD. Over 900 actuaries use Akur8 daily to build their pricing models across all lines of business.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240220894395/en/

Alison Smith for Open Lending

openlending@ink-co.com

Investor Relations Inquiries

openlending@icrinc.com

Source: Open Lending

FAQ

How does the partnership with Akur8 benefit Open Lending (LPRO)?

The partnership enhances Open Lending's risk analytics solutions with fast and accurate predictive insurance pricing models, enabling customers to expand automotive lending portfolios and respond to market conditions efficiently.

What are the key challenges faced by financial institutions according to Open Lending's 2024 Vehicle Accessibility Report?

Financial institutions struggle to expand borrower pools to include near- and non-prime borrowers while managing risk and increasing return on assets, as highlighted in the report.

How does Akur8 contribute to Open Lending's mission of expanding vehicle access to deserving borrowers?

Akur8's predictive modeling expertise, combined with Open Lending's industry experience and AI-powered solutions, helps address market dynamics faster and effectively meet the needs of today's borrowers, unlocking new revenue opportunities.