Brazil’s biggest banks are set to use better tech for lending decisions with the recent launch of Quod.
The data management company created by Brazil’s five largest banks Banco do Brasil, Bradesco, Caixa Econômica Federal, Itaú and Santander, started operating last month.
Quod is the first Brazilian company to focus on positive credit scoring, and according to its CEO, Rodrigo Abreu, artificial intelligence is part of the “company’s day to day”.
Until now, Brazil has relied on negative-only credit risk information – such as payment delinquencies – and Quod was launched to change this.
Brazilian banks are in the very early stages of using artificial intelligence for credit risk analysis, although other analytics software has been in their IT portfolio for some years.
Quod, said Abreu, was created with focus on big data analytics. “We tied up with LexisNexis Risk Solutions to build a credit risk analysis platform, from zero.”
The infrastructure provides tools for big data analytics for risk management and fraud prevention.
The system could be further boosted by combining different sources of data, both structured and unstructured, and combining it with public data, using AI, machine learning and other technologies.
Bigger picture
Abreu said he believes that the positive credit registry model will improve risk analysis.
“Today in Brazil, credit analysis is based on default rate, the failure to pay, and inactivation. But it is a restricted, poor vision. It only points out if there was a problem in the past and it is limited because it only covers consumers who have had default in the relation of credit consumption.
“On the other hand, the positive credit has a wider range and allows more advanced modeling technology,” the CEO explained.
By bringing together bigger pools of data and new technologies, lenders can get a more detailed risk profile.
“The more information you have, the better you will determine the risk, because it’ll be individualized,” said Abreu. “And you can stipulate an interest rate more in accordance to the profile. In long-term, the expectation is to reduce the spread, offers credit at attractive rates and increases competition in the market.”
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