Artificial intelligence in credit scoring

: digitalization in the banking landscape in Germany

Abstract

AI is rapidly transforming markets and challenging old business models. This dissertationexamines the AI-readiness of German banks, specifically in credit scoring. For this purpose,three different data types were collected. A literature review shed light on the current creditsystem in Germany and, as a comparison, in China. Furthermore, expert interviews disclosedthe potential chances and risks of AI-driven credit assessments. A quantitative surveycomplemented the expert opinions with those of potential users. The results indicated that theoverall readiness of AI in the German credit sector is relatively low. Experts suggested thatdrivers to use this technology are risk optimization and cost reduction. The identified mainbarrier complicating the implementation stems from regulatory requirements. While advancements are low, the collected customer data showed that most survey participants would agree to an AI-driven credit worthiness assessment. A scenario analysis combined all collectedinsights and demonstrated potential future developments. From a management perspective, German banks need to be faster in their technological transformation, in order to not loose competitiveness in the future.

Date of Award	8 May 2023
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Peter V. Rajsingh (Supervisor)