While effective and innovative use of data and insights in making lending decisions by banks and non-banks is necessary to avoid financial and reputational losses, lenders will prioritise investing in data and analytics in the next 1-3 years, as per a report published by analytics firm Experian.
The firm conducted survey of 164 senior risk decision-makers from banking, fintech, and non-banking lending organisations in India, Indonesia and Australia and found that around 67% expect investments in real-time data and analytics by their organisation. Of those, around 82% of respondents believed that their organisation needs to improve the use of data and insights in business decision making while 71% wanted their organisation to improve its ability to innovate.
“These numbers highlight the fact that most respondents believed that there is room for improvement in using data and analytics for credit decision making,” the firm said in a press release. While 82% of respondents felt that there is a need to improve data and analytics capabilities, nearly 84% said that there is an urgent need to embrace emerging technologies like artificial intelligence for credit risk assessment and management. However, only 36% of respondents felt that limited data standardisation was a major barrier to increasing automation in credit decisioning for lending organisations. Nearly 66% felt that legacy systems and dependence on manual processes were preventing organisations from turning to automation.
Currently, automation is at on the higher side in case of lending product such as credit cards and personal loans, work needs to be done in case of automobile, MSME and home loans to increase automation. “As banks, NBFCs and fintech companies attempt to drive financial inclusion, the use of alternative data can help lenders assess the creditworthiness of new-to-credit customers more efficiently. “This can result in better access to quick credit and help transform lives,” Neeraj Dhawan, country manager at Experian India said.