The Role of Artificial Intelligence and Machine Learning in Credit Scoring
Executive Summary
The use of artificial intelligence (AI) and machine learning (ML) in credit scoring is revolutionizing the lending industry. By leveraging vast amounts of data and advanced algorithms, lenders are able to more accurately predict credit risk, improve operational efficiency, and expand access to credit for underbanked individuals and small businesses. This white paper explores the benefits and challenges of AI and ML credit scoring, and provides guidance for lenders on how to successfully integrate these technologies into their lending processes.
Introduction
Traditional credit scoring models rely on a limited set of data points, such as payment history, outstanding debt, and length of credit history, to assess creditworthiness. These models are effective for many borrowers, but they can be limiting for individuals with thin credit files or non-traditional sources of income. AI and ML credit scoring models, on the other hand, can analyze a vast array of data points, including non-traditional data sources, to develop a more accurate and comprehensive picture of a borrower’s creditworthiness.
Benefits of AI and ML Credit Scoring:
1. Improved accuracy: AI and ML algorithms can analyze a wide range of data points, including non-traditional data sources such as social media activity and utility bill payments, to develop a more accurate picture of a borrower’s creditworthiness. This can result in more accurate credit scores and better loan decisions.
2. Expanded access to credit: Traditional credit scoring models can be limiting for individuals with thin credit files or non-traditional sources of income. By analyzing a broader range of data points, AI and ML credit scoring models can expand access to credit for underbanked individuals and small businesses.
3. Increased efficiency: AI and ML credit scoring models can automate many aspects of the lending process, reducing the need for manual underwriting and improving operational efficiency. This can result in faster loan decisions and a better borrower experience.
Challenges of AI and ML Credit Scoring:
1. Data privacy and security: As AI and ML credit scoring models rely on vast amounts of data, data privacy and security are critical concerns. Lenders must ensure that they are collecting and using data in compliance with applicable laws and regulations, and that they have robust cybersecurity measures in place to protect sensitive borrower data.
2. Bias and discrimination: AI and ML algorithms are only as good as the data they are trained on, and if that data is biased, the algorithms can perpetuate that bias. Lenders must be mindful of potential biases in their data and take steps to mitigate any potential discrimination in their lending decisions.
3. Explainability: AI and ML algorithms can be complex and difficult to interpret, which can make it challenging for lenders to explain their lending decisions to borrowers. Lenders must be able to provide clear explanations of their credit scoring models and lending decisions to borrowers.
Conclusion
AI and ML credit scoring has the potential to revolutionize the lending industry, providing more accurate credit scores, expanding access to credit, and improving operational efficiency. However, lenders must be mindful of the potential challenges, including data privacy and security, bias and discrimination, and explainability, and take steps to mitigate these risks. By investing in AI and ML technologies and developing robust risk management practices, lenders can successfully integrate these technologies into their lending processes and provide better loan decisions and a better borrower experience.
Samuel White
Director of Direct Marekts, Creditinfo Group.
ESG and the Banking Industry: Why Sustainability Matters
As the world grapples with environmental and social challenges such as climate change, social inequality, and governance failures, the importance of ESG (Environmental, Social, and Governance) considerations has never been more apparent. For banks, ESG is becoming an increasingly important aspect of doing business, as it can help to manage risks, enhance reputation, meet regulatory requirements, drive innovation and increase access to capital. In this blog post, we’ll explore each of these points in more detail.
- Risk management: ESG risks are significant and multifaceted, ranging from physical risks such as climate change-related natural disasters to transition risks stemming from legal and policy risks from greenhouse gas emissions and governance or social issues such as human rights abuses. By integrating ESG considerations into their risk management frameworks, banks can better anticipate and manage these risks, which can have a positive impact on their financial performance. For example, banks that fail to properly assess and manage climate-related risks could face stranded assets or lawsuits, which could impact their bottom line. Regulatory frameworks in Europe have taken note of this and the European Banking Authority now requires banks to disclose multiple data-points regarding ESG risks in their risk reports (Pillar III).
- Reputation: ESG is increasingly important to customers, investors, and other stakeholders who want to see banks acting as responsible corporate citizens. Banks that take ESG seriously and demonstrate their commitment to sustainability and social responsibility are more likely to attract and retain customers, as well as to access funding from ESG-focused investors. For example, a bank that invests in renewable energy projects or supports social programs in its local community is likely to be viewed more favorably than a bank that does not prioritize ESG. Mismanaging ESG factors to increase reputation may have negative effects, which became evident in some high-profile cases in 2022, both in the EU and US.
- Regulatory pressure: Regulators around the world are increasingly focusing on ESG issues and requiring banks to integrate these considerations into their business practices. For example, the European Union has introduced regulations such as the Sustainable Finance Disclosure Regulation (SFDR) and the Taxonomy Regulation, which require banks to disclose ESG-related information and align their investments with environmental objectives. Banks that fail to comply with these regulations could face fines or other penalties, which could impact their financial performance, reputation, and limit access to capital.
- Innovation: Banks that prioritize ESG are more likely to drive innovation and develop new products and services that address environmental and social challenges. By supporting the transition to a low-carbon economy and promoting social inclusion, banks can help to create a more sustainable and equitable future. For example, a bank that issues green bonds or sustainable investment products can help to finance renewable energy projects or other environmentally beneficial initiatives, potentially at better rates. Similarly, a bank that offers financial services to underserved communities can help to promote financial inclusion and social equality.
- Green bond issuance offers several benefits for banks, such as accessing a growing pool of socially responsible investors, improving their reputation as sustainable financial institutions, and supporting the transition to a low-carbon economy. The growth of the green bond market has been impressive, with a record-high issuance of $269.5 billion in 2021, up 4.6% from 2020. The cumulative issuance from 2007 to 2021 surpassed $1.5 trillion, with the US, China, and France being the largest issuers. The increase in green bond issuance is driven by investor demand and regulatory measures promoting sustainable finance.
In conclusion, ESG considerations are becoming increasingly important to the banking industry to manage risk, enhance reputation, meet regulatory requirements, and drive innovation. Banks that prioritize ESG are likely to be better positioned for long-term success, as they can help to create a more sustainable and equitable future for all stakeholders. As individuals, we can also play a role in promoting ESG considerations by supporting banks and financial institutions that prioritize sustainability and social responsibility. By working together, we can help to build a more resilient and sustainable global economy.
This may be one of the most important feature of ESG in banking, where the green bond space has grown exponentially over the last years.
By Gary Brown
Head of Commercial Development – Creditinfo Group.
Webinar: Baltic Market Overview
Register and join Jekaterina Rojaka, COO Creditinfo Lietuva , as she hosts another session on the Baltic market overview.
During this session, you will get the latest updates on the following:
- Improving sentiments – will it strengthen economic growth?
- Rising interest rates – what is the impact on the market?
- Sectoral perspective – losers and winners
Please complete the registration form below to receive the event link. The session will be in English – http://ow.ly/MSjh50NHVVX
Lithuanian debts increased by €6.8 million since the beginning of 2023
According to Creditinfo Lithuania’s latest analysis, Lithuanian debts have increased by €6.8 million since the beginning of the year, reaching a total of €364.8 million.
Of this amount, male’s debts stand at €261.8 million, while female’s debts are at €103 million. This is almost €6.8 million more than at the beginning of this year (€358 million). The total number of borrowers has also risen by 5,000 in the first quarter of this year, with the current total standing at almost 201,000.
Creditinfo Lithuania has recorded almost 201,000 debtors in its systems for March, with a total of 235,300 individuals having 235,300 debts in Lithuania.
After a more detailed examination of the debtor data, it was found that over 129,000 males and 72,000 females are currently in debt, making up 64% and 36% of all debtors respectively. Additionally, 32,500 males and almost 20,000 females have multiple debts, with 25.3% of male debtors and 27.7% of female debtors holding two or more debts.
On average, males owe €2,029, which is 30% more than the average debt owed by females (€1,435). This trend, coupled with the higher number of male debtors, results in men holding 78% of the total debt amount, while women hold only 22%.
During the first quarter, an additional 5,000 individuals in Lithuania fell into debt.
In March, the total number of individuals in debt amounted to 201,000, marking an increase of 5,000 from January’s 196,000. The total value of debt owed by all debtors also rose from €358 million to €364.8 million, with the total number of debts recorded in the credit bureau system increasing by 5,300. The largest number of new debts to households registered in the first quarter of this year, after debts to the financial sector, were for utilities and energy, with a total of 1,518 debts (12%).
“The analysis suggests that the majority of new debts recorded this year can be attributed to the energy and heat price crisis. Rising fuel costs have resulted in increased indebtedness, with people seeking short-term financing in order to balance consumption and expenses,” explains Aurimas Kačinskas, the Head of Creditinfo Lithuania. “Not everyone has had sufficient time to alter their financial habits, which has resulted in the growing number and value of debts.”
Men aged between 35 and 45 are considered to be the most high-risk debtors
Despite fluctuations in the number of borrowers and their levels of indebtedness, the typical borrower profile has remained consistent in recent years. Men aged 35-45 are the riskiest debtors, with debts amounting to €75 million, accounting for almost 29% of the total amount owed by men. The second riskiest group is men aged 45-55, with €61 million in debt, representing 23.3% of the total amount owed by men. In third place are men aged 25-35, who hold €55 million in debt, accounting for 21% of the total amount owed by men. Men aged 55-65 hold €43 million in debt, while those over 65 hold €17 million. Men under 25 hold the lowest amount of debt at almost €15 million.
Among female debtors, the under-25 age group has the lowest amount of debt, while other age groups have the following distribution: €29 million (45-55), €26 million (35-45), €20 million (55-65), and €17 million each (25-35 and over 65).
According to Mr Kačinskas, it is important for citizens to assume their financial obligations responsibly and meet them on time to maintain a positive credit history, which determines their access to financial services, loans, credit cards and payment provisions.
Creditinfo Partners With VisionFund International to Provide Analytics and Automation Solutions
Creditinfo Group, the leading global service provider for credit information and risk management solutions, today announces a multi-market partnership with VisionFund International to provide analytics and automation solutions throughout their global Microfinance Network.
Creditinfo’s credit risk analytics and automation solution will help VisionFund to expand their customer base whilst controlling costs. This will enable VisionFund to increase financial inclusion and improve economic conditions for lower income clients around the world.
Creditinfo will draw upon its global and regional experts to support the implementation of these solutions over a three-year period. Initially, Creditinfo will provide its solutions to six of VisionFund’s markets with a view to extending them to additional VisionFund’s markets in due course.
Paul Randall, CEO at Creditinfo said: “We are delighted to have been selected by VisionFund International to provide IDM Decision Automation solution to their global network of MFIs (Microfinance institutions). Our understanding and experience of working across over 20 markets is strongly aligned with VisionFund’s experience as one of the largest multinational networks of MFIs with its operations spanning 28 countries and reaching over 1 million active customers. We are excited about the journey ahead and helping VisionFund realize its goal of enabling clients to grow their livelihoods and secure their futures.”
Karen Lewin, Director of Credit Risk at Vision Fund International said: “With Creditinfo’s solution, we will increase our outreach, and improve both lending efficiency and our credit risk assessment capabilities, to better meet the needs of all our customers. Creditinfo’s team of global and local experts will provide us with the level of support we need to achieve these goals and increase financial inclusion in the markets where we operate.”
For information visit www.creditinfo.com
Kredītinformācijas Birojs and Citadel Bank Sign an Agreement to make It easier for Ukrainian citizens to receive Financial Services
It has already been reported that last year the “Credit Information Bureau” of Latvia (KIB) concluded an agreement with the “International Credit Information Bureau” in Ukraine ( Мидрождение бюро кредитних історий ) on the exchange of credit history data of Ukrainian nationals.
Travel agencies in Lithuania are slowly rising from the ashes
Revenues doubled in a year but remained three times lower than before the pandemic.
Vilnius, Lithuania, 24/01/2023. Travel agencies in Lithuania that declared their income in 2021 earned almost twice as much as in the previous year. However, compared to income in 2019, they earned almost three times less, according to an analysis carried out by the credit bureau Creditinfo Lietuva. Almost 100 tourism companies were loss-making. With the increase in travel flows, the number of debts increases and their average size grows.
There are currently 783 companies in Lithuania for which tour organisation is the main activity. In 2021, travel agencies declaring revenues collectively earned more than €171 million, almost double (82%) the pandemic year 2020 (~€94 million). However, travel agencies are still a long way from a real recovery – for example, in 2019, their revenues were almost €474 million, but fell more than fivefold in the aftermath of the pandemic.
According to 2021 data, the largest annual revenue was earned by the following companies: Novaturas (€108,995 million), Tez Tour (~€60 million), Itaka Lietuva (€12.5 million), Coral Travel Lithuania (€9.5 million), Kidy Tour (€8.9 million), Estravel Vilnius (€6.3 million), Estekspress (€4 million), Traveldeals LT (€4 million), Glotera (€3.6 million) and ZIP Travel (€2.9 million).
The top ten most profitable travel agencies are Novaturas (€909 thousand), Baltic Tours Group (€633 thousand), Vestekspress (€530 thousand), Glotera (€336 thousand), Traveldeals LT (€307 thousand), Baltic Clipper (€288 thousand), Baltic Travel Service (€271 thousand), TEZ Tour (€215 thousand), Estravel Vilnius (€158 thousand), Riviera Tours (€148 thousand) and ZIP Travel (€123 thousand).
Staff numbers shrink by a quarter
In total, travel agencies currently employ almost 2,000 employees (1,850). While the number of enterprises has remained almost constant over the past few years (776 in 2019, 787 in 2021), the number of employees has fallen by almost a quarter since 2019, from 2,426 to 1,850.
Travel agencies are more often headed by women, accounting for almost 56% of all managers. The average age of a travel agency manager is 49 years and the average age of a travel agency is over 15 years.
In the travel sector, men’s salaries are higher than women’s – as of November 2022, the average salary for men was €2,659 per month, while for women it was €2,014 per month. At the start of 2022, the average salary for women was €2,053 per month and for men was €2,364 per month.
State support has prevented more bankruptcies
Since 2004, a total of 94 travel agencies have gone bankrupt in Lithuania, with the highest number of bankruptcies recorded in 2009 (10) and in 2015 (12). In 2022, there were 5 travel agency bankruptcies, while there were 3 in 2021 and 4 in 2019. No travel agency bankruptcy was recorded in pandemic year 2020.
“The travel sector was one of the hardest hit by the pandemic, along with hotels and restaurants. During the pandemic, when revenues from tour operators dropped fivefold, it was state support that saved the sector from bankruptcy,” explains Aurimas Kačinskas. But the challenges of the pandemic were replaced last year by new challenges – the war in Ukraine and the sanctions imposed on Russia have exacerbated the energy crisis, fuel prices have risen and many travel routes have been disrupted. The slower-than-expected recovery of the air transport sector, with a sharp increase in fares, is having a negative impact on the business of tour operators, preventing them from recovering faster.
According to the head of the credit bureau, it was state support that determined the stability of the number of enterprises and the discipline of submitting financial statements – compared to other sectors, only 90 travel agencies did not submit their financial statements for 2021, making them ineligible for state support.
However, a risk analysis of travel agencies shows that there have been both positive and worrying signs in the recent period. For example, as of January this year, 9% of companies were in the high and highest classes of bankruptcy, compared with 12% a year ago. In terms of delayed payments, 17% of companies are currently in the high and highest risk classes, down from 21% last year.
Compared to 2020 and 2021, the recent increase in debt is slightly higher and the average amount of debt per person is growing. At present, 306 debts have been registered in the credit bureau system, amounting to more than €349 thousand, with an average debt of €1,141. A year ago, the number of debts was 316, amounting to €351 thousand, with an average debt of €1,112. In January 2020, 255 debts amounting to €203 thousand were registered, with an average debt of €798. 335 travel agencies mostly owe money to Sodra (€3 million). The debt of 158 travel agencies to telecommunications companies amounts to €222 thousand. 8 travel agencies owe €74 thousand to financial companies.
“The tour operator business is recovering, but revenue growth is slower than expected in the wake of the pandemic due to the many geopolitical and economic shocks around the world. The tourism sector is currently encompassed by a number of risks, so it is advisable to keep a close eye on the changing financial indicators of partners organising the trips,” concludes the head of the credit bureau.
More information:
Aurimas Kačinskas, CEO of Creditinfo Lithuania (aurimas.kacinskas@creditinfo.com)
The Know Your Customer (KYC) world and Creditinfo’s role in it.
The acronym KYC stands for three very simple and understandable words – Know Your Customer. But the meaning of the processes and expectations behind those three letters are most often not so simple and straightforward, as whoever must deal with this today already well-known acronym, knows that the world and the industry behind this magical acronym, is already vast and growing every day.
KYC in very essence means that you must have understanding and information of the background of your customer. Often this information is divided into three basic categories:
- Identification of the persons connected or operating behalf the customer.
- The field of activity or daily business including the understanding of the origin of the customers funds.
- The understanding if customer possesses certain risks while having any business relationships with him.
Mainly this sort of detective work is required in the purpose of mitigation the risks in anti-money-laundering/fight against terrorism financing (AML/CTF) but it is also relevant in the process of imposing international sanctions as sanctioned persons are interested that their business interest would remain undiscovered.
Even companies that are not subject to AML regulation need to ensure that they stay out of trouble caused by risks that are risen because of partners or clients with fraudulent, criminal, or sanctioned background, as this may result with loss of revenues/funds, bad business reputation or fines by authorities.
So therefore, it is essential for market entities to trust their business affiliates and therefore they need to verify that everything is OK with their customers and threat of the damage caused by realization of different risks, is minimized.
What is happening in Europe to strike this conversation now?
One very practical side for knowing your customer is to be sure that you’re not violating any sanctioning regime in force. Sanctions and sanctioning regimes may not be familiar to all of us who we just are involved our day-to-day business, but this obligation is something we all must know and follow. International sanctions are seen as sort of political means for influencing certain group of entities, jurisdictions, or organizations to behave in line to accordance with the international human rights, rules of law and territorial integrity. Sanctions are imposed in a way that all private and legal entities are obliged to fulfill them, authorities who are imposing them are usually international organizations (EU, UN) or state governments.
As Russia launched massive war campaign in Ukraine in February 2022 and has performed several actions against Ukraine’s territorial integrity already from year 2014 this kind of behavior has naturally found a reflection from EU by imposing sanctions. As from 2014 there was already two regimes in force (regulations EU No 269/2014 and No 833/2014) it was easy on 2022 to EU to add several sanctioning updates (altogether by 8 packets) against Russia (and Belarus).
As the conflict remains in Ukraine and also as there are several war crimes discovered performed by Russian troops during the occupation of Ukraine, we can be more than certain that EU will impose more updates to Russian sanctioning regimes. This only intensifies the need for market entities to have a clear understanding on what are the situation regarding the restrictive measures in force and where to find that information.
How is CREDITINFO playing a role in this?
Mitigating the risks is always the question of having updated and trustworthy information that person must have for making decisions and enforcing correct procedures. Regarding risk mitigation and imposing enforced sanctioning regimes clients often face themselves in front of different questions –
- What exactly do they have to do?
- How do they do it?
- Where can they find help and trustful partner for this?
- Are the solutions for doing it comfortable and simple to use?
- How expensive is it?
Providing both, the trustworthy information from respectful sources and the solution for being compliant in the regards to that obligation (by using Creditinfo-offered solution) is one of the ways of building up successful client relationship in KYC sector (obligations in KYC area may differ depending on the AML/TFC and imposing sanctions viewpoint). KYC procedures regarding sanctions can be divided into two different service blocks:
- Identifying the persons behind and connected to legal entity.
- Easy to use, reliable screening solution for determining whether there are imposed sanctions or not.
It is important to have flexible products in place for meeting the needs for most of the market entities as clients tend to prefer to order all the solutions from one place. For example, clients may have the need only for determining certain persons connected with legal entities (like UBO’s), other clients may only need data sources for setting up internal screening procedures for their inter-company use, while others are just willing to outsource everything (analysis, data and screening).
Lastly, instead of being in the last mile lets be the first! As already mentioned, there are different market entities who are operating in KYC business, and they are all seeking for cost efficient and trusted data sources for providing best data quality with best price to their customers. Creditinfo Group’s presence in several different countries, with the direct access to local state registry information or other base data source in those countries therefore makes us one of the trusted partners for well-known global companies.
KYC products are in process of continuous development and as the needs for our clients change, we need to align our services accordingly. If there are ideas, proposals, or questions, please feel free to reach me via email – urmas.pai@creditinfo.com
Urmas Pai
KYC & Fraud Global Product Manager
JSC “International Bureau of Credit Histories” launched the chatbot “MBKI online” in order to provide Ukrainians and migrants from Ukraine with access to their credit histories.
Lending is one of the main elements of the modern financial system. In one way or another, most people rely on loans from banks – whether these are credits, mortgages, installments, credit cards to pay for critical goods and services. An important role in this process is played by credit bureaus that collect, store, process and transmit information on borrowers’ payment discipline, credit scoring and current obligations.
However, when people move to a new country or are forcibly evicted from their homes due to occupation or fleeing war – this is what many Ukrainians are currently experiencing – it becomes much more difficult to access financial and other services. This unfortunately disadvantages refugees and adds to the problem regardless of whether they had good or bad credit history before.
Aiming to resolve issues related to solvency confirmation of the tenant from Ukraine and checking the credit history of Ukrainians when applying for a loan or employment, JSC “IBCH” (one of the largest Credit History Bureaus in Ukraine, a member of the international Creditinfo Group since May 2021) created the “MBKI online” chatbot.
For more than 16 years IBCH (Creditinfo Ukraine) has been cooperating with the largest banks and non-bank financial institutions, including foreign financial institutions and credit bureaus of other countries. The organization is now focusing its attention on supporting Ukrainians, both in Ukraine and abroad, with getting access to credit reports.
Kateryna Danylchenko, CEO of JSC “IBCH” (Creditinfo Ukraine), stated, “Since the beginning of the war in Ukraine, over 6 million people – including myself, my fellow colleagues and partners– have been forced to leave the country at short notice with no idea if or when they will return. Displaced Ukrainian refuges face a whole host of challenges without necessary documentation or access to registries. While JSC “IBCH” (MBKI, Creditinfo Ukraine) became the first Ukrainian bureau to launch cross-border data sharing with bureaus from 5 countries, it is also important to assure easy and mobile direct-to-consumer gate to credit history reports. “MBKI online” is so important in helping Ukrainians staying in country and abroad gain online access to their credit histories (also in English), so they can prove their ability to make payments on time to landlords or new employers, follow their credit history updates and bureau score change, as well as to report about lost identification documents.”
“Creditinfo was set up to aid financial inclusion through making credit information more easily accessible and digestible for borrowers and lenders.” – comments Paul Randall, CEO Creditinfo Group. “I’m so glad that there’s something practical we’ve been able to do to help Ukrainian refugees across Europe to access financial services. The creation of this chatbot is an important development in our journey to make the lives of everyone forcibly displaced by this war that tiny bit easier.”
The “MBKI online” chatbot, available on Viber and Telegram, gives Ukrainians access to their own credit history and offers an easy way of identification including using BankID.
Chatbot enables the customer:
• To get a certificate about credit history (in Ukrainian and English);
• To find out personal credit score;
• To get answers to basic questions about credit history;
• To inform the Bureau about the loss of a passport or other identity document;
• To ask for a loan and find out available offers.
Chatbot accepts different payment methods (including bank card, Apple Pay and Google Pay). For more information and to start working with the service, follow the link: https://credithistory.com.ua/bots/
The fintech movement in the banking industry
Is fintech an enabler or disruptor in the banking industry? Fintech the new technology that improves and digitalizes the delivery and services of the banking industry. These solutions can include software helping connect with customers, businesses, and banks through agile processes to manage financial services better. Or better use of data to offer a more personalized and customer centric offering.
The lending landscape has gone through some major changes in recent years, and this shift does not appear to be slowing down. Based on the latest information from the World Bank, about 76% of adults have a bank or mobile account, this is up from 51% in just over a decade. The rise of mobile money solutions, which allow users to turn their smartphones in digital wallets and use it to pay for services, have played an important role tapping into the unbanked segment and supporting this improvement.
Fintechs are realizing the opportunities to disrupt the challenges faced by traditional banking and offering new solutions that better suit the needs of customers and businesses. By embracing technology, fintech companies can collect and store more data on customers so they can offer personalized solutions with greater choice of products. Unlike traditional banks, fintechs can move with speed and deliver digital solutions improving the user experience.
The increase in fintech players has increased competition between traditional banks and fintechs. Traditional banks are paving the way to collaborate with fintechs while others are implementing teams to focus on in-house projects. Older generation customers may value trust over the latest trends and will therefore remain loyal customers to traditional banks., However, younger generations will demand more and swifter solutions because that is what they are familiar with. Traditional banks embracing fintech solutions will see them provide the flexible solutions that customers are looking for.
One of the biggest reason the banking industry has adapted to fintechs, is due to their ability to connect with customers 24/7 through an omnichannel approach. This not only increases customer reach and convenience but also allows banks not to rely solely on customers visiting a branch.
It is expected that we will continue to see changes in the banking industry for years to come, the speed of change will depend on how much and how fast customers continue to adapt to fintech solutions. It’s clear, traditional banks are no longer the monopoly in this industry, with more digital banks, neo– banks and new players such as telcos and payment companies entering the lending landscape. Nobody is expecting the traditional banks to be replaced but it is likely that banks and fintechs partnering with one another will allow the traditional banks to enhance technologies and by coming together both the fintechs and the banks can benefit in this highly competitive market.
Samuel White,
Direct Markets Director, Creditinfo Group.
