The opportunities and challenges of utilizing alternative data in the assessment of creditworthiness in the Finnish consumer finance
Liuska, Johannes (2021)
Liuska, Johannes
2021
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2021060113225
https://urn.fi/URN:NBN:fi:amk-2021060113225
Tiivistelmä
The modern financial network facilitates profound credit risk assessment. However, currently the Finnish finance industry uses conventional methods to examine the creditworthiness of a customer. Luckily, this will change since the full-file credit information register is in progress and expected to be launched in 2024. Nonetheless, the current trends such as transformation of working life, digitalization, increasing urbanization and consumer over-indebtedness might have major impact in the Finnish society and ultimately on creditworthiness. Moreover, new alternative data sources, increased capacity of big data analytics and open banking concepts could provide even better ways to incorporate smarter methods to assess the consumer creditworthiness. Thus, the financial service providers might need to develop their credit risk management to align with the variables of the modern society and economics. Therefore, this qualitative research investigates the opportunities and challenges of utilizing alternative data in the assessment of creditworthiness in the Finnish finance industry. The thesis reviews the underlying theories of information asymmetry (Stiglizt and Weiss 1981) and data-driven decision making (Provost and Fawcett 2013), and definitions of creditworthiness (Caplinska 2020). It also explores the current credit reporting environment in Finland and European Union to create a clearer picture of the current state of creditworthiness assessment.