The coming resumption of the credit cycle offers a rare opportunity for innovative lenders to gain access to new markets and customer segments. New entrants can be incumbent financial institutions expanding into new segments and markets or nontraditional lenders seeking to establish credit operations.
Following four steps, including 1) utilizing data from a wide range of sources, 2) building the decision engine, 3) creating scalable infrastructure and 4) monitoring and maintaining the models over time, organizations can set up operations to manage credit risk. With a distinctive strategy and the requisite expertise, innovative lenders will be able to overcome obstacles and capitalize on an emerging opportunity.
This article was originally published on McKinsey.com on April 1, 2021, and is reprinted here by permission.
