Big Data and Machine Learning: The Evolution of Risk Evaluation From Fico to A.I.
William Beaver, Ph.D
CTO and Co-Founder, Mirador
Big data and machine learning is not just the purview of a few innovative marketplace lenders. Increasingly, traditional lenders can leverage these technologies to gain a more complete picture of a business’s creditworthiness. In particular, machine learning (ML) allows lenders to evaluate each unique business by looking at many more of the variables that are important to understanding that business. Instead of basing risk analysis on single credit history score– one basic formula– machine learning provides a way for lenders to build a more complete view using multiple formulas and diverse sources of data that can include social media, shipping information or even macroeconomic data such as the price of oil. This empowers banks with a predictive understanding of the risk to make more informed lending decisions.