Reducing probability of default is a crucial factor for both borrower and lender, whether it be mortgage, car finance, BNPL or other forms of consumer credit. With the rising cost of living, inflation and interest rates squeezing household budgets, assessing suitability and affordability in the most accurate way possible is vital to ensuring sustainable credit is approved, and that lending opportunities to viable borrowers are not missed.

Poorly performing loan portfolios affect lenders’ margins and balance sheets, the ability to borrow at the most competitive rates on wholesale markets, initiates costly collection cycles, can inflict reputational damage, and draw the interest of regulators. For borrowers, missing payments and defaulting on debts makes it more difficult or impossible for them to obtain credit in the future and the damage done to their credit scores can be significant and lengthy.

Using advanced AI and data science, a highly accurate picture of borrowers’ financial capabilities is revealed to significantly improve credit decisioning and substantially reduce the risk of default. The application of Finexos’ proprietary FIOLA® Risk Engine when assessing credit applications enables probability of default to be more accurately assessed and lower Non-Performing Loan (NPL) ratios achieved.

The AI-powered cash flow-based credit-decisioning engine harnesses real-time cash flow-based data through Open Banking and Finance. Bespoke risk engines with tailored scenario-based risk modelling can be created for individual lenders to further enhance results.

In addition to reducing probability of default and promoting good outcomes for consumers in line with Consumer Duty, automating credit-decisioning processes dramatically speeds up decisions for borrowers and significantly reduces costs for lenders. Finexos’ advanced suitability and affordability analysis can also be conducted without the need for a credit score when not available, opening-up further viable lending opportunities that may otherwise have been missed and increasing yields.