Credit intelligence: A more robust alternative to current commercial loan modelling approaches

Neil Kahrim and Sean Hunter
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Neil Kahrim: OakNorth, USA
Sean Hunter: OakNorth Analytical Intelligence, UK

Journal of Digital Banking, 2021, vol. 6, issue 1, 25-32

Abstract: Most commercial lending is based on a decision-making process and modelling approach largely unchanged by technology. By adopting a data-driven alternative that takes into account the fundamental differences between businesses, lenders are able to make data-driven decisions that will ultimately lead to better credit outcomes. This paper aims to briefly outline some of the limitations of the current approach to commercial lending and suggest improvements (collectively, ‘credit intelligence’), taking specific note of lessons of the current COVID-19 crisis and how this has transformed the economic landscape. It also provides a case study (OakNorth in the UK) where these principles have been implemented and notes the promising results so far.

Keywords: credit intelligence; credit risk; portfolio monitoring; commercial lending; commercial banking (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:aza:jdb000:y:2021:v:6:i:1:p:25-32

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