Juniper Research, the definitive authority in financial technology markets, has unveiled a study forecasting an unprecedented surge of 67% in credit scoring services, propelling the industry to an astonishing $44 billion by 2028.
The study’s focal point is the monumental transformation expected in emerging markets as African and Middle Eastern regions are anticipated to spearhead a remarkable 117% expansion, culminating in a projected expenditure of $3.7 billion by 2028.
This growth trajectory hinges on the strategic integration of alternative data into underwriting models. By harnessing insights from sources as diverse as social media activity and monthly utility bills, lenders are primed to penetrate untapped segments of unbanked and underbanked populations in emerging markets.
The report underscores the pivotal role of Open Banking in revolutionizing alternative credit scoring models. By granting credit bureaus and financial providers access to bank account transaction data, this approach crafts a comprehensive consumer profile, ultimately refining credit scoring accuracy.
Furthermore, the report advocates for the application of Open Banking in business credit scoring, bridging critical lending gaps for small and medium-sized enterprises (SMEs).
Cara Malone, the visionary behind this research, emphasizes the transformative potential of Open Banking: “Open Banking has the potential to address multifaceted challenges, particularly those related to cashflow and debt management. Currently underutilized in business credit scoring, it paves the way for greater ease and transparency in financial data sharing, ultimately unlocking unprecedented lending access.”
The study also shines a spotlight on the indispensable role of artificial intelligence (AI) in eradicating thin files in developing markets.
The convergence of alternative credit data, embedded scoring models, Open Banking, and AI heralds a new era of access to finance.
This innovative approach addresses the information gaps faced by individuals and businesses, paving the way for precise and forward-looking credit scoring mechanisms.