The risk landscape is changing rapidly and new challenges alter how companies respond to and manage risk, said Qarar, a leading decision analytics firm, highlighting its top five consumer credit risk trends for 2018 the Middle East.

1.    Streamlining routine operational tasks through automation

Improving operational efficiency is a top priority and savvy organisations are focusing on streamlining routine tasks like customer retention, debt recovery and originations decisions by coupling advanced risk analytics with automated decisioning. Automation of routine tasks across the credit life cycle will be a prominent trend this year.

2.    Enhancing the customer experience through end-to-end decisioning

As the Middle East gears up for 2020, banks and financial institutions need to enhance their interactions and messages to meet the growing demand for high quality customer experiences. Delivering individualized experiences at scale by tailoring prices and products to each individual customer by using multiple data sources and increased predictive and self-learning analytics will help create that sought after personalised customer experience.

3.    Social media data paves the way for alternative credit scoring

With the rise of social media platforms, lenders now have the potential to harness large volumes of non-traditional data to assess creditworthiness. This is particularly valuable in the UAE, where social media penetration is high but credit histories are limited as vast portions of the population are highly transient or expats.2018 will see innovative lenders using this alternative data to assess thinner-file borrowers like students and expats.

4.    Establishing a robust framework for IFRS 9 models

One of the key challenges for banks in the region and indeed the world will be to establish a robust validation framework for IFRS9 models and ECL calculation. These models are already in place but validating and monitoring them is another matter, particularly as the IFRS 9 accounting standard will increase provisioning requirements for banks. Addressing this situation is of paramount importance in 2018.

5.    Adopting machine learning and advanced analytics to fight financial fraud

Fraud risks are growing in speed and complexity, and as a result2018 will see banks adopting artificial intelligence, machine learning and advanced analytics to fight this fraud. Financial executives will move to introduce appropriate processes, develop and acquire the necessary talent, and create the right culture to integrate analytics into their fraud-detection efforts.

Zaid Kamhawi, CEO of Qarar, said:  “We need to outline new opportunities and challenges for risk leaders and help them to identify ways to mitigate risk, create value and ultimately influence our client’s performance. This can be achieved only by knowing what trends lay ahead and how to prepare for them. Our strategic discussions around risk need to evolve. By considering our top five consumer credit risk trends and proactively adapting to them, we hope companies can remain resilient and strong in the face of rapid change.” – TradeArabia News Service