Business credit agency recognize the value of new data sources and advanced analytics, but are hesitant to actually use them for fear of hurting consumer trust in their brands. As a result, these data and technologies are used more for anti-fraud purposes than for risk assessment and decision-making. The dependence of credit institutions on credit bureaus is reduced.
The slowdown in the adoption of alternative data and advanced artificial intelligence and data analysis algorithms comes amid growing concerns about the security, ethics and transparency of data raised by digitization. The economy is stagnating. Innovative credit institutions and credit bureaus struggle to gain a foothold in the market. The promise of technological innovation has not been realized, the cost of credit has not been reduced, credit decisions have not become more effective, the number of consumers with no or little history of borrowing transactions has increased, and consumers have become more difficult to access credit products or services.
The overall deterioration of the credit information market environment stems from two main reasons: one is that consumers are disappointed with the digital economy, and the Internet economy has failed to improve the quality of life of consumers as expected, but has introduced many unexpected risks. The other was that the economy was depressed throughout the 1920s, and more and more people were losing steady jobs and becoming self-employed.
The way credit bureaus collect and use data remains largely unchanged. Credit bureaus are not enthusiastic about collecting and using alternative data (such as rental data) because credit bureaus are not interested in such data. The innovation and competition of credit bureaus mainly focus on improving traditional products and services rather than exploring new ways. The cost of borrowing and obtaining credit information has not decreased significantly, and the number of consumers with transaction data in the credit bureaus’ databases is on a downward trend. Credit bureaus are also reluctant to expand beyond financial credit.
Affected by negative factors such as data breaches, consumers prefer to trust familiar financial institutions and avoid innovative financial services. Consumer willingness to share personal data remains low. Consumers are checking their credit reports more often because of concerns about the negative impact of inaccurate data and the risk of fraud. As the economy stagnates, trust in financial institutions declines and borrowing becomes more difficult, some consumers are cutting back on credit products and borrowing from friends or family instead.
All in all, under this scenario, the transparency and information security of credit information services have been improved, but the innovation and competition of the industry are seriously insufficient, and the role and significance of credit information service institutions in the development of the credit industry have declined. Large, traditional credit bureaus can struggle to survive, but smaller, innovative institutions are struggling to survive. The development of commercial credit information service industry shows a regressive trend.
Post time: Dec-06-2023