Smart Limit: the solution that maximizes credit approvals without compromising financial security

Declined credit transactions are a constant challenge for banks, fintechs, and companies offering financial services. After all, each denial represents a direct loss of revenue and can also undermine customer trust and loyalty—key elements in a highly competitive market. In this context, Smart Limit emerges as a strategic solution, turning challenges into opportunities for the financial sector.

Using behavioral data and artificial intelligence, Smart Limit enables a more flexible and accurate management of credit products, helping reduce unnecessary declines and improving the customer experience.

It’s important to note that, especially in Latin America, traditional credit assessment models worsen this issue. Factors such as financial exclusion and the unique characteristics of each country’s financial market make fixed credit limits insufficient, excluding consumers and limiting opportunities for financial institutions to reach new audiences.

In this article, we will explore how Smart Limit works and how Dock’s solution has helped institutions and companies across various sectors offer more accessible and personalized products, mitigate risks, and increase revenue.

 

How declined credit transactions impact the financial sector

 

Declined transactions are a growing challenge for banks, fintechs and financial services providers in Latin America. In some countries in the region, rejection rates can exceed 20%, with the most common causes being rigid credit limits and failures in risk assessment.

For institutions operating in the financial sector, declined credit transactions undermine customer trust. When a payment is denied, users question the efficiency of the service, affecting their loyalty at a time when a personalized experience should be a top priority.

Additionally, these rejections have significant financial impacts, such as lost revenue (since consumers often abandon the purchase), increased customer support costs, and damage to brand reputation.

 

Flexible credit card is a strategic opportunity for the financial sector

 

As mentioned earlier, the issue of declined credit transactions is often linked to failures in risk assessment and overly rigid limits. By adjusting processes and adopting solutions like intelligent credit analysis, financial institutions can balance security and accessibility, ensuring a better customer experience.

Illustrating this trend in the financial sector, the percentage of credit cards exceeding their limits in the U.S., Canada, and the U.K. has been rising since July 2022, according to a report by FICO.

This growing demand represents a valuable opportunity for companies offering credit products to implement a more flexible credit limit strategy.

 

Credit revolution: what is Smart Limit and how does it work?

 

Smart Limit is an innovative feature that automatically adjusts the available credit for customers based on profile analysis and predefined rules. This technology ensures greater agility and accuracy in credit management.

Compared to traditional fixed limits, Smart Limit offers greater flexibility and efficiency. After all, it reduces friction in critical moments, such as declined purchases due to insufficient credit, preventing uncomfortable situations for customers. At the same time, it provides a more personalized experience, aligned with user expectations.

This feature has practical applications across various financial services, such as credit cards and loans. For example, a customer may have their limit temporarily increased for specific or emergency purchases without having to go through a bureaucratic process. .

For loans, the technology can adjust offered amounts based on the user’s risk profile and payment capacity. A customer with a strong payment history, for instance, could receive a temporary loan limit increase during periods of greater need without having to submit a formal request.

In short, Smart Limit is a strategic tool for institutions looking to enhance the customer experience and increase their competitiveness in the market.

Key features of Smart Limit:

• Additional credit adjusted to customer needs;
• Uses advanced algorithms and real-time data analysis;
• Automatic evaluation of financial history;
• Enables one-time purchases without declines;
• Responsive to promotions and emergencies;
• Preserves financial stability.

Benefits of Smart Limit for card issuers

 

Increased conversion

With fewer declined transactions, the solution directly contributes to a higher approval rate, resulting in greater financial returns.

 

Improved customer experience

By automatically and personally adjusting credit limits, it helps prevent uncomfortable situations for customers, enhancing their experience and strengthening the institution’s reputation.

Satisfied customers are more likely to recommend the service to others, expanding the user base. This approach also helps to build a relationship of trust, which is essential for customer retention.

 

Operational efficiency

Automation reduces the need for manual processes and lightens the workload for customer service teams, enabling a more efficient and cost-effective operation.

It’s also worth noting that automated processes improve accuracy, reducing errors and minimizing rework.

 

Segmentation and personalization

The solution adjusts credit limits based on customer habits and needs, allowing fintechs, banks, and companies to offer more personalized and competitive products, increasing customer loyalty.

 

Greater transaction security

Smart Limit uses advanced technology to assess customer behavior and detect suspicious activity, ensuring stronger fraud protection.

This extra security safeguards both the institution and the customer, reducing losses, strengthening service reliability, and minimizing regulatory risks.

 

How to implement Smart Limit: discover Dock’s solution

 

Dock offers a Smart Limit tool that enables flexible credit limits for users of credit products.

 

API based, the solution provides advantages such as easy integration with existing systems, low initial cost, no need for proprietary infrastructure, and scalability. Additionally, it includes features such as:

• Increase approvals: expands credit limits based on precise analysis, enhancing customer experience and satisfaction.
• Risk mitigation: continuously monitors behaviors and profiles to reduce the risk of default. .
• Exposure control: advanced management tools and dynamic limit adjustments to ensure sustainable exposure aligned with the customer’s risk profile.

 

How does Dock’s Smart Limit solution work?

 

Dock’s Smart Limit solution leverages machine learning and artificial intelligence technologies to analyze a wide range of customer information.

This approach enables the allocation of additional funds for specific payments. In addition to increasing transaction approval rates, the tool ensures a high level of security by identifying and blocking suspicious activities.

 

 

Discover some of the features your business can gain with this solution:

 

Optimized capital allocation with lower Basel K requirements

With the intelligence of adjustable limits, our issuers can maximize regulatory capital efficiency. This solution enables a strategic allocation of lower credit limits, freeing up more resources for growth and security.

 

 Risk mitigation with compliance to resolution 4966/21

Starting in January 2025, the approach shifts from a retrospective view to a preventive credit provision model, based on expected loss.

With Smart Limit, we directly influence the predictability of provisions, anticipating risk control.

 

Seamless cardholder experience while maintaining transaction capacity

Our solution reduces friction for the end customer, enabling a smooth and continuous experience. In compliance with resolution 96/2021, we facilitate proactive limit adjustments with prior communication, preserving customer trust and satisfaction.

 

Why choose Dock’s Smart Limit?

 

At Dock, we go the extra mile to provide unique and effective experiences for our clients and their users. With the Smart Limit solution, we are helping companies across Latin America reduce declined transactions and expand credit access for their users.

With our Smart Limit solution, your business can cut costs and offer an optimized experience—all while maintaining regulatory compliance and financial data security. Additionally, you gain:

• Fast deployment: cloud-based solution already integrated with Dock’s authorizer.
• Increased revenue: boost earnings by intelligently approving transactions that would otherwise be declined.
• Enhanced customer experience: reduce friction for cardholders and increase retention.
• Robustness: built on a powerful and reliable solution with a strategic, analytics-driven optimization approach.
• Fraud prevention: integrated with the best fraud prevention tools on the market.
• Flexibility: centralized strategy management, making it easier and faster to define and adjust policies and rules.

Dock is the leading payment and banking technology provider in Latin America, offering a complete infrastructure for banks, fintechs, and companies across various sectors to create and deliver innovative financial services to their customers.

 

Count on our team to build a more efficient journey for your business! Contact us to learn more about Smart Limit!

 

Smart Limit: key takeaways from this article

 

• Declined credit transactions hurt revenue and customer trust, impacting business competitiveness.
• Smart Limit emerges as a solution to reduce declines and enhance the customer experience by automatically adjusting credit limits based on behavioral data.
• This system offers greater flexibility compared to traditional models, especially in markets like Latin America, where rigid limits restrict access to credit.
• Dock provides an API based tool that enables easy integration, low initial cost, and high scalability.
• This technology helps businesses to optimize credit limits, improve customer experience, and reduce operational costs.

 

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