Could you identify any fintechs that are working on specific A.I. application to credit risk analysis of private companies?

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Posted by AGavieiro
Asked on April 13, 2016 12:04 am
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Short answer: No. I doubt there are any at this time. Long Answer: AI is a broad term but generally refers to automated machine learning. This is something that’s still in its infancy. Some businesses will try to pass off advanced data mining or BI as “AI” but it’s not. And if an underwriter did happen to have a great AI program helping with their analysis, they might not even share that information. Underwriters are always looking for ways to refine their risk models and help them better understand a borrowers ability to repay. There’s a trend in of looking at different kinds of data (like social) to improve determining a borrower’s credit worthiness (ex. https://trustingsocial.com/). However, you’re most likely to see these newer concepts proved out in direct to consumer lending vs. private businesses. Underwriters to private business, particularly SMB, are more likely to rely on financial data. The ones we work with look at things like cashflow, historical balances, NSF occurrences etc. One of the outlying factors they also take into account is the borrower’s industry. Some are more high risk than others. As AI begins to evolve, I think one of the biggest opportunities will be the ability to use advanced predictive modeling for the economy / industries to protect against large scale defaults. A big risk for lenders isn’t necessarily the credit worthiness on any individual borrower, but what happens when the entire economy / industry takes a downturn. – Dexter Weatherly (Financial Apps)
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Posted by Dexter Weatherly
Answered on April 13, 2016 9:43 am
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