How improving credit risk assessment can catalyze FIs’ growth: 3 questions with Visa’s Carl Rutstein
- Financial institutions grapple with obstacles in navigating the technology and route for credit risk assessment and management.
- Carl Rutstein, Visa's Global Head of Advisory Services, sheds light on the impact of data and AI on credit risk assessment and discusses the challenges faced by FIs in going down this route.
Perfecting the skill of analyzing and aligning ‘ability to pay’ with ‘verification’.
by SARA KHAIRI
Amid a backdrop of mounting consumer payment defaults, more stringent regulatory frameworks, and heightened capital requirements particularly affecting major banking institutions, underwriting has experienced a notable contraction.
This shift has catalyzed a transition within the lending market, moving away from the traditional dominance of established financial institutions toward the emergence of non-bank entities competing for market share.
FIs are exploring beyond conventional underwriting metrics to improve decision-making processes and risk assessment with the help of artificial intelligence [AI] and big data to catalyze overall business growth. Just over half, 65% of FIs in the US use alternative credit data for 50%-100% of new applicants, with over half of them reporting revenue increases of more than 15%.
Yet, financial institutions grapple with obstacles in navigating the technology and route for credit risk assessment and management, according to a new report by Visa.
I engaged in a conversation with Carl Rutstein, Visa’s Global Head of Advisory Services, about…
