Alternative Financial Credit Scoring - Thematic Research

Alternative Financial Credit Scoring -Thematic Research

Summary

Alternative lenders and big tech have developed fundamentally new approaches to credit assessment, incorporating a wider variety of data sources such as history of utility bill payments, rent payments, repayments to payday lenders, social media data, browsing and search history, employment history, educational background, and even psychometric testing. This report explores the alternative approaches to credit scoring that are being deployed in the financial services industry.

The market for alternative credit scoring comprises a vast ecosystem of provider types and business models. Much of it exists, by definition, outside of traditional financial services in the form of alternative lenders, niche fintech providers, and big tech. However, incumbent banks are also innovating, while challenger banks and credit bureaus are launching a variety of new data-driven decision-making techniques -especially in emerging markets.

Scope

  • Amid COVID-19, the millions of otherwise careful, frugal customers, who scored well under traditional models have become non-creditworthy. Continued reliance on traditional risk measures could prove pro-cyclical, choking off credit supply for those struggling small businesses that will be so critical to economic recover.
  • Big data technology allows alternative lenders to collect and use a larger volume and variety of data points. For example, Ant Financial and Mercado Libre claim that their credit quality assessment typically involves more than 1,000 data series per loan applicant.
  • Digital technologies -cloud, robotic process automation, big data -help digital lenders process massive loan volumes quickly and restructure loans at minimal marginal costs.
Reasons to Buy
  • Understand the key technology, macroeconomic, political, and regulatory trends driving alternative credit scoring.
  • Access the latest consumer survey data on evolving channel behavior, provider preferences, and product holding.
  • Understand key competitive inroads for alternative lenders to gain market share.
  • Understand market share and growth prospects for niche fintech and big tech lenders.
  • Access firm-level/case study insight on leading fintech credit risk partners for incumbent banks.


  • Executive summary
  • Players
    • Table Figure 1: Who are the leading players in the alternative credit scoring theme and where do they sit in the value chain?
  • Thematic briefing
    • Orthodox credit risk models penalize and/or exclude large segments of society
      • Table Figure 2: Traditional credit scoring relies on five key metrics
  • Trends
    • Technology trends
      • Table Technology trends
    • Macroeconomic and political trends
      • Table Macroeconomic and political trends
    • Regulatory trends
      • Table Regulatory trends
  • Industry analysis
    • Market size and growth forecasts
      • Table Figure 3: Growth of big tech and fintech lending, 2014-19
      • Funding
      • Credit
      • Customer acquisition
      • Servicing/CRM
      • Incumbent banks
        • Table Figure 4: Consumer attitudes to digital banks are changing quickly
        • Table Figure 5: Consumers typically value convenience and transparency in their banking partners
        • Table Figure 6: Few consumers are motivated to share personal data in exchange for access to improved credit
    • Mergers and acquisitions
      • Table Mergers and acquisitions
    • Timeline
      • Table Figure 7: The alternative credit scoring story
  • Value chain
    • Niche fintech/alternative lenders
    • Big tech
    • Credit bureaus
    • Aggregators
  • Companies
    • Big tech
      • Table Big tech
    • Credit bureaus
      • Table Credit bureaus
    • Niche fintech/alternative lenders
      • Table Niche fintech/alternative lenders
    • Banks
      • Table Banks
  • Sector scorecards
    • Banking sector scorecard
      • Who's who
        • Table Figure 8: Who does what in the banking space?
      • Thematic screen
        • Table Figure 9: Thematic screen
      • Valuation screen
        • Table Figure 10: Valuation screen
  • Glossary
    • Table Glossary
  • Further reading
    • GlobalData reports
      • Table GlobalData reports
  • Our thematic research methodology
    • Table Figure 11: Our five-step approach for generating a sector scorecard
  • About GlobalData
  • Contact Us

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