The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Treasury

Non-traditional data aids trade credit scoring

Banks have responded to fintech innovation in credit risk assessment by introducing more sophisticated processes for determining the financial health of trade finance customers.

data-chart-screen-960.png

Many small and medium-sized enterprises (SMEs) face the same challenge: they need trade funding, but lack the extensive documentation that helps funders understand the risk profile of their business.

A recent joint Trade Finance Global (TFG)/World Trade Organization (WTO) report raises questions over how to provide a more favourable framework for assessing credit risk through digital innovations, considering the new analytics that are available.

It is easy to forget that there is a lot of financial data still to be explored
Prag Sharma, Citi
Prag-Sharma-Citi-960.jpg

Many banks are already using new sources of data, for example enhancing standard credit file data with history of transactions and payments, and other behavioural data.

“The huge advantage of this data is that it comes from multiple sources not controlled by the borrower and thus is much harder to manipulate,” says Michael Boguslavsky, head of artificial intelligence (AI) at Tradeteq.

“Some of this data also changes at a much higher frequency than accounting data. The challenge is how to integrate it into the credit models.”

Analytical technology has accelerated the credit decision-making process at Citi, which – in addition to conventional financial data – is exploring how to leverage data from sources such as e-commerce marketplaces and logistics services providers to assess performance risk.

“We


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree