While effective and innovative use of data and information in lending decision-making by banks and non-banks is necessary to avoid financial and reputational losses, lenders will prioritize investments in data and analytics over the next 1 to 3 years, according to a report by analytics firm Experian.
The company surveyed 164 senior risk decision makers from banking, fintech and non-bank credit organizations in India, Indonesia and Australia and found that around 67% expect their organization invests in real-time data and analytics. Of these, around 82% of respondents believed their organization needed to improve the use of data and information in business decision-making, while 71% wanted their organization to improve its ability to innovate.
“These figures highlight that most respondents believed there was room for improvement in the use of data and analytics for credit decision-making,” the company said in a statement. hurry. While 82% of respondents felt there was a need to improve data and analytics capabilities, nearly 84% said there was an urgent need to adopt emerging technologies such as artificial intelligence to credit risk assessment and management. However, only 36% of respondents felt that limited data standardization was a major barrier to increasing automation of credit decisions for lenders. Nearly 66% felt that legacy systems and reliance on manual processes were preventing organizations from turning to automation.
Currently, automation is higher in the case of loan products such as credit cards and personal loans, work needs to be done in the case of car loans, MSMEs and home loans to increase automation. “As banks, NBFCs and fintech companies try to foster financial inclusion, using alternative data can help lenders more effectively assess the creditworthiness of new customers.” This can translate into better access to quick credit and help transform lives,” said Neeraj Dhawan, Country Director at Experian India.