Generative AI

As financial institutions seek more accurate and inclusive methods of evaluating creditworthiness, traditional credit scoring models are being challenged. The rise of generative AI services has opened the door to an entirely new paradigm—one where lenders can harness alternative data sources such as transaction histories, social behavior, gig economy income, and even mobile phone usage patterns to make smarter lending decisions. Generative AI solutions for BFSI are accelerating the shift from conventional models to data-rich, adaptable frameworks that can assess previously underbanked populations. This transformation is particularly vital given that over 1.4 billion adults globally remain unbanked , according to the World Bank. The Shortcomings of Traditional Credit Scoring Legacy credit scoring models, such as FICO, depend heavily on historical financial data, including loan repayment history, credit utilization, and length of credit history. While effective for assessing those alrea...