The credit risk assessment market is estimated to be valued at US$ 7.31 Bn in 2022 and is expected to exhibit a CAGR of 12.4% over the forecast period 2023 – 2030, as highlighted in a new report published by Coherent Market Insights.
Market Overview:
The credit risk assessment market involves the evaluation of individuals and businesses who wish to apply for new lines of credit, loans, or mortgages. Credit risk assessment helps determine the ability and willingness of borrowers to repay their obligations. This process utilizes proprietary scoring algorithms or statistical models that analyze information contained in a credit report and other application data to assess credit risk.
Market Dynamics:
The credit risk assessment market is driven by increasing digitalization across the financial services industry, which has led to rising adoption of advanced analytics and AI-based technologies for credit decisioning. Machine learning and deep learning algorithms integrated into credit risk assessment platforms can analyze extremely large and complex consumer datasets. This allows lenders to more accurately determine if a borrower is likely to repay their debt obligations. Additionally, open banking regulations have enabled the usage of alternative data sources like payroll transactions, utility payments, mobile phone bills to supplement credit files, further enhancing risk predictions. The integration of AI is expected to make credit risk assessment more inclusive by expanding access to financing for underbanked consumers with limited credit histories.
SWOT Analysis
Strength: Credit risk assessment provides a standardized methodology for identifying vulnerable customers. The sophisticated algorithms use customer data from multiple sources to predict defaulters with up to 80% accuracy. This helps lenders minimize losses.
Weakness: Privacy concerns around data sharing can limit the sources of customer information available. Outdated models may fail to capture new types of risks.
Opportunity: Growing digital financial services increase the need for reliable risk assessment tools. Emerging economies seeing rising credit usage also offer expansion opportunities.
Threats: Stricter data privacy laws could restrict what data can be accessed and shared for risk analysis. Competitors delivering more advanced analytics through new data sources and techniques pose a threat.
Key Takeaways
Global Credit Risk Assessment Market Demand is expected to witness high growth, exhibiting CAGR of 12.4% over the forecast period, due to increasing digital financial services adoption. Rapid credit expansion in developing economies also drives market growth.
Regional analysis: The US dominates currently, contributing over 30% of global revenues due to established financial sectors and high technology adoption. However, the Asia Pacific region is poised to be the fastest growing market exhibiting over 15% CAGR owing to rising credit consumption in major economies like China and India.
Key players: Key players operating in the credit risk assessment market are Experian, Equifax, TransUnion, FICO, Moody’s Analytics, Oracle, IBM, SAP, SAS Institute, Fiserv, Pegasystems, Genpact, ACL, Kroll, PRMIA, Riskonnect, RiskSpotter, Riskdata, BRASS, Misys. Experian leads currently with its global reach and depth of customer insights. Startups are also making inroads through specialized alternative data sources and predictive techniques.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
Ravina Pandya, Content Writer, has a strong foothold in the market research industry. She specializes in writing well-researched articles from different industries, including food and beverages, information and technology, healthcare, chemical and materials, etc. With an MBA in E-commerce, she has an expertise in SEO-optimized content that resonates with industry professionals.