Compliance and Address Insight

The golden rule of marketing has always been, “know your customer.” In today’s regulatory environment, however, it might be more accurate to say, “know your customer – or else!” Nowadays customer data – particularly in areas such as geocoding and demographic data – are often central to maintaining compliance with a wide range of regulations, in the financial world and elsewhere.

In response to this, Service Objects has just released a powerful new capability to help automate the gathering and analysis of geolocated consumer data: Address Insight – US. It provides address standardization, address geocoding and demographic information together in one real-time service, and is designed to serve a wide range of applications ranging from compliance to targeted marketing.

Examples of financial compliance issues

Let’s look at some of the areas where address insight can benefit your compliance efforts:

  • The Community Reinvestment Act (CRA) requires federally insured lending institutions to provide lending opportunities to low-to-moderate income communities – and in particular, prove that they are not “redlining” specific neighborhoods and denying them credit. One of the key performance criteria for evaluating CRA compliance is your geographic distribution of loans.
  • The Home Mortgage Disclosure Act (HMDA), enacted by Congress in 1975, requires lenders to publicly disclose data regarding their mortgage lending activities. While this is a disclosure law with no implied quotas, HMDA also serves to ensure that lenders do not contribute to the decline of specific geographic areas by failing to provide adequate mortgage financing.
  • For consumer lending in general, the Federal Financial Institutions Examination Council (FFIEC) has a set of Fair Lending Examination Procedures used to audit lenders for evidence of lending discrimination. These reviews include an analysis of geographic patterns in lending to seek evidence of “redlining” or neighborhood-based discrimination.
  • Conversely, certain real estate transactions may be subject to Geographic Targeting Orders (GTO), which are enhanced identification and record-keeping requirements imposed by the Federal Financial Crimes Enforcement Network for expensive real estate transactions in areas that are prone to money laundering activities. For example, as of 2017 transactions of $3 million or more in Manhattan or $1 million or more in parts of Florida were subject to GTOs, along with numerous other metropolitan areas.

A solution for compliance and beyond

Of course, there are numerous applications beyond compliance for geocoded address insight. For example, academic researchers can use address insight to study specific neighborhoods – for example, the University of Chicago divides the city of Chicago into 75 defined communities that correlate with tract information, and can be used as study variables. And of course, the combination of location insight and demographic data can be a very powerful tool for market targeting.

For compliance applications, Service Objects’ Address Insight – US provides data such as MSA code, state code, county code (FIPS), and tract number for addresses for FFIEC compliance. It also includes all the benefits of Service Objects’ flagship address validation and standardization capabilities, as well as appended demographic information such as household values and incomes by ZIP code.

As with all Service Objects services, Address Insight – US is available through APIs that can be interfaced directly to most contact data automation platforms, as well as convenient batch list processing for smaller applications or specific datasets. Contact us for a free 500-transaction trial key, and see what this new tool can do for you!

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