Credit risk analytics: Shaping the future of the credit business

Executive Summary

In the last 20-25 years, credit risk analytics (CRA) used by banks and other financial institutions has greatly improved, evolving from basic credit risk estimates to state-of-the-art analytics driven by stochastic modelling, machine learning and artificial intelligence (AI).

Additionally, CRA has been integrated into the modern risk management framework. In fact, for the majority of today’s credit institutions, CRA is the central element of the risk management framework and a driver of strategic risk decision-making and business efficiency.

The accelerated development of CRA has been driven by several global trends:

  • Digital Transformation: The digital transformation of financial services.
  • Data and Analytics Revolution: The revolution in data and analytics techniques which has improved on traditional analytics methods through the use of stochastic modelling, machine learning, AI and other advanced techniques.
  • Drive for RoE (Return on Equity): Credit Risk teams are being asks to activity manage the portfolios to drive RoE. This drive is pushing teams to look for risk weighted opportunities in the portfolio – all whilst in a low or rising interest rate environment.
  • Dynamic market: Changes in credit market structures and industry competition caused by financial innovation and disruptive new entrants (FinTech).
  • Changing regulatory environment: Increased regulatory scrutiny in terms of conduct towards customer, customer vulnerabilities as well as equal opportunity of credit.

In this paper, we discuss how we have developed a comprehensive methodology to measure the CRA capabilities of banks and other credit institutions which allows for benchmarking of CRA maturity versus peers. By performing CRA assessments on numerous credit institutions across the globe, we have created a unique dataset of information on their CRA competencies.

Read the Report

To find out more about the findings of our industry study, learn about the developments and trends in credit risk analytics and understand the three tiers of our CRA assessment we can provide for credit institutions.

If you would like to discuss the findings or learn how EXL can help your organisation make sense of it’s data and carry out an assessment of your credit risk analytics capabilities, please contact us

EXL Contributors:

Manish Dureja VP and Subject Matter Expert - Credit Risk Analytics


We would like to thank the European Risk Management Council for their contribution and insights towards this paper.