Thailand’s digital lending growth demands better credit risk models

New approaches to credit risk assessment are crucial for financial inclusion and innovation.

Thailand’s growing digital lending ecosystem is driving the need for more advanced credit risk models to support financial opportunities for banks and customers.

Adisorn Hatairatana, Head of Consumer Credit Risk Management & Technology at Krungsri (Bank of Ayudhya), said that traditional credit risk models may no longer be sufficient.

“We are having new requirements, and we have new business problems that we are facing today in careers management. So we're going to need a new way of looking at solving this problem, a new approach that could help in finding the solution,” he explained.  

Collaboration and openness will be critical in developing more effective models. “We're going to need to be open about how we do things and learn new ways of doing things. I think the experience sharing and knowledge sharing would be important to advance a credit risk model in this region,” he added.  

With the rise of digital lending, virtual banks are poised to play a crucial role in shaping the future of credit risk models. Unlike traditional banks, they are not burdened by legacy systems, giving them an advantage in exploring innovative risk assessment techniques.  

“Overall, having virtual banks in the market would drive everyone to innovate,” Hatairatana said. “But specifically for virtual banks, they would not be bound by any traditional approach. They would be able to look into innovative areas and explore that.”

New credit risk assessment methods, including alternative underwriting models, will allow virtual banks to refine their lending strategies. “A lot of the infrastructure that we set up for banking would have been geared towards traditional scorecards, but new modules are coming up,” Hatairatana explained. “I think virtual banks would be able to take advantage of that much better than traditional banks.”