Last updated on March 29th, 2024 at 09:10 am

A Look Into The Future: What Will The Credit Underwriting Industry Look In 10 Years?

Credit underwriting is one of the emerging industries all around the world. Many market shifts have altered how the lending and insurance industries have delivered their service. In a pivotal scenario like this, it is only fair to gauge the potential and growth of this industry in the next decade. 

Moreover, if you are planning to have a credit risk underwriting career, then you should be aware of where you are going.

So, let’s check out

An Outlook on Credit Writing Industry in the Next 10 Years

Problems in the traditional lending system

Assessing the creditworthiness of an individual or a company is a complex job. Worst of all, it is a manual process. It is a dredging job, especially in a country like India, because the financial sector is making a gradual shift in digitizing its data. Moreover, the population is high and doing the job manually can be a strenuous one.

But how does it affect the borrower? Due to the slowness of the underwriting job, the lending system also is sluggish, so the borrowers are left stranded when they apply for a loan. The borrowers have to wait for weeks or months to get the loan approval or rejection.

Not only that, the people with poor credit scores did not have any scope for getting a loan. Those people who did not have a bank account also did not get a loan because they had no credit score. This way, the Indian lending sector was behaving quite inefficiently and needed something to put a new lease of life on it.

Fintech is bringing in a lot of changes

Thanks to the arrival of Fintech, there was an advent of technology in the Indian lending industry. But this technological surge was not noticed in India alone. Leading players in the lending sector noticed this technology trend entering the global lending space. But what changes did Fintech bring to the lending space?

When Fintech entered India, the startups were quite uneasy because they were in unfamiliar territory. Slowly, their footprints began to increase, and business began flowing in. Newer players also started entering this domain. As a result, from 2015 to 2019, there were around 1000 startups in the Fintech space with investments up to $1.94 Billion. In 2019, the lending for Fintech startups was around $320 Million.

So, if you are looking for a credit risk underwriting career, Fintech companies should be on top of your priority list.

Generation of underwriting data became faster

With technology by its side, the Fintech companies started to generate data faster than ever. Loans were getting approved or rejected within dates. Customized credit solutions were being introduced. So many new loan applications were getting approved. Fintech is now moving at a blistering pace, faster than ever and with better customer engagement. With each step, Fintech is moving closer to automating the whole process. This will certainly change the whole lending sector, and most importantly, it will completely evolve the credit underwriting industry. Most importantly, with the cloud at play, it has displayed copious amounts of data in lending reports and the underwriting process.

The credit rating system will also change in the future. Lending will become easier and will not remain as cumbersome as it is today.

Data and technology will seamlessly converge into one

Newer data sets and modern technology will be driving an underwriting evolution. It is a possibility that it is expected that by 2030, Indian insurance companies will use AI in one form or other. It was also published in Deloitte’s 2022 insurance outlook. Many respondents who undertook the survey were sure that some alternative data would be available because of AI automation. Also, OCR (optical character recognition) will help in the digitization of manual records. It will make the underwriting process survive longer and stay as resilient in the future years. 

So, as a professional working in this sector and the aspirants can now take up a credit risk underwriting course and get a better understanding of how technology is changing this sector.

AI and Big Data will be powering real-time underwriting

With the introduction of AI and Big Data into underwriting, credit analysis and the generation of a credit score will become a lot easier than it is right now. Using AI, the whole system of creditworthiness will be automated. The computation of the market credibility of an entity will be extremely accurate and show the credit applicant's true picture. This will help to sort out bad payers with good credit scores from good payers with thin credit scores. AI will easily distinguish a good risk from a bad risk. This creates opportunities for those applicants who were unable to secure a loan before.

Conclusion

To sum up, a credit risk underwriting career is a lucrative option, considering the number of new-age financial institutions entering the market. The scope here is now substantial.

So, to take up a credit risk underwriting online training from leading institutions like Imarticus Learning. The Credit Risk Underwriting Course will help you to grab your opportunity to become a professional in this field.