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How Machine Learning Technology is Enhancing Credit Risk Modeling

How Machine Learning Technology is Enhancing Credit Risk Modeling

Risk is an intrinsic part of the money lending system. There’s always the chance that customers borrowing money from financial institutions fail to repay their loans. And to determine the exact probability of a customer paying off a loan or defaulting on it, banks and other lenders rely on credit risk modeling.

Next-Gen Credit Assessment Techniques

The credit situation has changed a lot from how it used to be ten years ago. And to keep up, lenders must also evolve by identifying and responding to issues in real-time.  Credit risk strategy has become more complex and multiple factors need to be weighed to arrive at the correct decision that’s both profitable for the enterprise and customer. Sophisticated models that contain more than one dimension, such as additional information about a customer’s finance and behavior patterns, are in demand. These models help get a 360 degree view of the customer’s financial condition.

Moreover, banks want to provide broader financial inclusion with the intention that more customers get credit scores and avail their financial services. But they need to keep a check on their risk levels too. Traditional credit assessment techniques having linear nature, for example logistic regression, are useful, but only till a point.

Neural Networks

Recent developments in neural networks have greatly improved credit risk modeling and seem to provide a solution to the above mentioned problem. One such breakthrough is the NeuroDecision Technology from Equifax that facilitates more inclusive models, so scores and consent can be given to a bigger and varied group of customers.

Machine Learning (ML) is a fast-moving field and neural networks are used within deep learning, which is an advanced form of ML. It has the potential to make more accurate predictions and go beyond the linear analysis methods of logistic regression.  This is a positive development for both the business and its customers.

Linear Vs. Inclusive

What happens in a logistic regression model is that all customers above a straight line (prime) get approved, whereas everyone falling below that line (subprime) gets rejected. Hence, customers who are working hard towards creating a good credit profile but fall just below prime get declined repeatedly. Despite this problem, traditional linear models are widely used because outcomes can be easily conveyed to customers, which helps to be in sync with consumer credit regulations that demand higher transparency.

On the other hand, neural networks lead to non-linear or curved arcs that include those customers who aren’t yet prime, but are evidently moving in the right direction. This increases the ‘approved customer’ base, which is beneficial for the business because customers are being served better and the enterprise is growing. This model is advantageous from the perspective of customers also as it allows more people to access mainstream financial services.  The only problem is explaining the outcome to customers as neural networks tend to be rather complex.

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Concluding Note

Many companies are producing robust credit modeling tools employing deep learning techniques. And these game-changing developments highlight the fact that they are just the starting point of a series of interesting developments ahead.

You can be a part of this exciting and booming field too! Just enroll for credit risk modeling certification at DexLab Analytics. Detailed courses chalked out and taught by industry professionals ensure that you get the best credit risk training in Delhi.


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To Be Ahead of the Curve: Banks Must Beef Up Technology

To Be Ahead of the Curve: Banks Must Beef Up Technology

Technology is critical. To improve efficiency, reduce costs, stay on the cutting edge over tailing rivals, fulfill customer requirements and initiate a proper risk management process, technology is an incredible tool to possess.

The abovementioned facts received momentum at the SAS Risk & Finance Analytics Roadshow in Lagos, during which it was inferred that the banks nowadays are adapting themselves to regulatory changes, thus reducing costs in no time.

In this context, Charles Nyamuzinga, Senior Business Solutions Manager, Pre-Sales Risk Practice, stated that banks in Africa need to confront with additional challenges, including risk analytics skills gaps, challenges associated with data management and integrating finance and risk management nuances across an organization.

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“But, on the positive side, they have started considering technology as a way of eliminating these challenges, and have access to new streams of data that are also helping to advance the financial inclusion mandate,” he noted.

In compliance with global financial norms, African banks should by now be compliant with the new IFRS9 Accounting Standard, which comes with some changes in the way expected credit losses used to be calculated.

“There is also need to start thinking about the new ‘Basel IV’ framework, which impacts on how banks calculate their risk weighted assets, and the amount of capital they need to offset those risks,” he added.

According to Charles, banks are feeling intense regulatory pressure nowadays, while tussling with daily requirements, challenges and questions associated with taking stress tests. The regulators have become severe on stress testing processes, and that may be for good! Besides, banks need to worry about the effect on reputation, capital shortfalls and negative influence on earnings, along with non-compliance penalties.

His concern was thoroughly evident in these statements, “There’s a good chance that banks in Africa could get this wrong if they use disparate and fragmented systems for data management, model building and implementation and reporting – which is often the case – or if they try to do the computations manually.

 

“The biggest causes of incorrect modeling are data management and quality issues and skills shortages. Banks have to obtain and analyze enormous amounts of detailed data, for example. And, to comply with IFRS 9, banks must look at millions of customers with hundreds of data points.”

In support of the above observations, SAS Sales Manager, West Africa, Babalola Oladokun raised concerns if a bank ends up miscalculating a customer’s credit score, it would result in giving a loan to someone, who for sure won’t be able to repay it. This can have serious implications for IFRS 9expected credit loss calculations. Furthermore, if a bank lacks in capital on hand to offset the loan deficiency, the case will go straightaway to Basel Capital requirements compliance issues.

“Data gathering and manipulation from disparate data sources wastes time and resources that banks could have used to develop new products and find more convenient ways to serve their customers – something their competitors in the FinTech space are very good at,” he noted.

As last thoughts, FinTechs use virgin data streams to draw instant conclusions and fuel decision-making processes for customers. For an example, they base their inferences about granting a loan to someone who doesn’t even have a bank account – surely, this is an innovative way to give non-banking population access into the world of finance.

If finance and big data interests you, we suggest you go through our credit risk management courses in Delhi. DexLab Analytics is not only a trailblazer in credit risk modelling courses, but also a robust platform for training young minds.

 

This article first appeared in – https://guardian.ng/business-services/technology-crucial-to-tackling-risks-skill-gaps-in-banks

 

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How Fintechs Help Optimize the Operation of Banking Sector

How Fintechs Help Optimize the Operation of the Banking Sector

Financial technology- Fintech plays a key role in the rapidly evolving payment scenario. Fintech companies provide improved solutions that affect consumer behavior and facilitate widespread change in the banking sector. Changes in data management pertaining to the payment industry is occurring at a fast pace. Cloud-based solution and API technology (Application Programming Interfaces) has played a major role in boosting the start-up sector of online payment providers like PayPal and Stripe. As cited in a recent PwC report over 95% of traditional bankers are exploring different kinds of partnerships with Fintechs.

 Interpreting consumers’ spending behavior has enhanced payment and data security. Credit risk modeling help card providers identify fraudulent activities. The validity of a transaction can be checked using the GPS system in mobile phones. McKinsey, the consulting firm has identified that the banking sector can benefit the most from the better use of consumer and market data.  Technological advancements have led to the ease of analyzing vast data sets to uncover hidden patterns and trends. This smart data management system helps banks create more efficient and client-centric solutions. This will help banks to optimize their internal system and add value to their business relationship with customers.

Role of Big Data

 Over the past two years, the digital revolution has created more data than in the previous history of humankind. This data has wide-ranging applications such as the banks opening their credit lines to individuals and institutions with lesser-known credit-score and financial history. It provides insurance and healthcare services to the poor. It also forms the backbone of the budding P2P lending industry which is expected to grow at a compound annual growth rate (CAGR) of 48% year-on-year between 2016 and 2024.

The government has channelized the power of digital technologies like big data, cloud computing and advanced analytics to counter frauds and the nuisance of black money. Digital technologies also improve tax administration. Government’s analysis of GST data states that as on December 2017, there were 9.8 million unique GST registrations which are more than the total Indirect Tax registrations under the old system. In future big data will help in promoting financial inclusion which forms the rationale of the digital-first economy drive.

Small is becoming Conventional

Fintechs apart from simplifying daily banking also aids in the financial empowerment of new strata and players. Domains like cyber security, work flow management and smart contracts are gaining momentum across multiple sectors owing to the Fintech revolution. For example workflow management solution for MSMEs (small and medium enterprises) is empowering the industry which contributes to 30% of the country’s GDP. It also helps in the management of business-critical variables such as working capital, payrolls and vendor payments. Fintechs through their foreign exchange and trade solutions minimizes the time taken for banks to processing letter of credit (LC) for exporters. Similarly digitizing trade documents and regulatory agreements is crucial to find a permanent solution for the straggling export sector.

Let’s Take Your Data Dreams to the Next Level

Regulators become Innovators

According to the ‘laissez-faire’ theory in economics, the markets which are the least regulated are in fact the best-regulated. This is owing to the fact that regulations are considered as factors hindering innovations. This in turn leads to inefficient allocation of resources and chokes market-driven growth. But considering India’s evolving financial landscape this adage is fast losing its relevance. This is because regulators are themselves becoming innovators.

The Government of India has taken multiple steps to keep up with the global trend of innovation-driven business ecosystem. Some state-sponsored initiatives to fuel the innovative mindset of today’s generation are Startup India with an initial corpus of Rs 10,000 crore, Smart India Hackathon for crowd-sourcing ideas of specific problem statements, DRDO Cyber Challenge and India Innovation growth Program. This is what enabled the Indian government to declare that ‘young Indians will not be job seekers but job creators’ at the prestigious World Economic Forum (WEF).

From monitoring policies and promoting the ease of business, the role of the government in disruptive innovations has undergone a sea change. The new ecosystem which is fostering innovations is bound to see a plethora of innovations seizing the marketplace in the future. Following are two such steps:

  • IndiaStack is a set of application programming interface (APIs) developed around India’s unique identity project, Aadhaar. It allows governments, businesses, start-ups and developers to utilize a unique digital infrastructure to solve the nation’s problems pertaining to services that are paperless, presence-less and cashless.
  • NITI Ayog, the government’s think tank is developing Indiachain, the country’s largest block chain. Its vision is to reduce frauds, speed up enforcement of contracts, increase transparency of transactions and boost the agricultural economy of the country. There are plans to link Indiachain to IndiaStack and other digital identification databases.

As these initiatives start to unfold, India’s digital-first economy dream will soon be realized.

Advances in technologies like Retail Analytics and Credit Risk Modeling will take the guesswork and habit out of financial decisions. ‘’Learning’’ apps will not only learn the habit of users but will also engage users to improve their spending and saving decisions.

To know more about risk modeling follow Dexlab Analytics and take a look at their credit risk analytics and modeling training course.

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How Credit Risk Modeling Is Used to Assess Credit Quality

Given the uproar on cyber crimes today, the issue of credit risk modeling is inevitable. Over the last few years, a wide number of globally recognized banks have initiated sophisticated systems to fabricate credit risk arising out of significant corporate details and disclosures. These adroit models are created with a sole intention to aid banks in determining, gauging, amassing and managing risk across encompassing business and product lines.

 

How Credit Risk Modeling Is Used to Assess Credit Quality

 

The more an institute’s portfolio expands better evaluation of individual credits is to be expected. Effective risk identification becomes the key factor to determine company growth. As a result, credit risk modeling backed by statistically-driven models and databases to support large volumes of data needs tends to be the need of the hour. It is defined as the analytical prudence that banks exhibit in order to assess the risk aspect of borrowers. The risk in question is dynamic, due to which the models need to assess the ability of a potential borrower if he can repay the loan along with taking a look at non-financial considerations, like environmental conditions, personality traits, management capabilities and more.

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Credit Risk Modelling: A Basic Overview

Credit Risk Modelling: A Basic Overview

HISTORICAL BACKGROUND

The root cause for the Financial Crisis which stormed the globe in 2008 was the Sub-prime crisis which appeared in USA during late 2006. A sub-prime lending practice started in USA during 2003-2006. During the later parts of 2003, the housing sector started expanding and housing prices also increased. It has been shown that the housing prices were growing exponentially at that time. As a result, the housing prices followed a super-exponential or hyperbolic growth path. Such super-exponential paths for asset prices are termed as ‘bubbles’ So USA was riding a Housing price bubble. Now the bankers, started giving loans to the sub-prime segments. This segment comprised of customers who hardly had the eligibility to pay back the loans. However, since the loans were backed by mortgages bankers believed that with housing price increases the they could not only recover the loans but earn profits by selling off the houses. The expectations made by the bankers that asset prices always would ride the rising curve was erroneous. Hence, when the housing prices crashed the loans were not recoverable. Many banks sold off these loans to the investment banks who converted the loans into asset based securities. These assets based securities were disbursed all over the globe by the investments banks, the largest being done by Lehmann Brothers. When the underlying assets went valueless and the investors lost their investments, many of the investment banks collapsed. This caused the Financial Crisis and a huge loss of investors and tax-payers wealth. The involvement of Systematically Important Financial Institutions (SIFIs) and Globally Systematically Important Financial Institutions (G-SIFIs) into the frivolous lending process had amplified the intensity and the exposure of the crisis.

Understanding Credit Risk Management With Modelling and Validation – @Dexlabanalytics.

SYSTEMATICALLY IMPORTANT FINANCIAL INSTITUTIONS AND THEIR ROLE IN SYSTEMIC STABILITY

A Systematically Important Financial Institution (SIFI) is a bank, insurance company, or other financial institutions whose failure might trigger a financial crisis.

If a SIFI has the capacity to bring in a recession across the globe then it is known as a Globally Systematically Important Financial Institution (G-SIFI). The Basel Committee follows an indicator based approach for assessing the systematic importance of the G-SIFIs. The basic tenets of this approach are:

  1. The BASEL committee is of the view that the global systemic importance should be measured in terms of the impact that a failure of a bank can have on the global financial system and wider economy rather than the risk that the failure can occur. So, the concept is more of a global, system wide, loss given default (LGD) concept rather than a probability of default (PD) problem.
  2. The indicators reflect the following metrics: size of banks, their interconnectedness, the lack of availability of substitutable or financial institution infrastructure for provided services, their global activity, their complexity etc. Each of these are defined as:

(i) Cross-Jurisdiction: The indicator captures the global footprints of the banks. This indicator is divided into two activities: Cross Jurisdictional claims and Cross Jurisdictional liabilities. These two indicators measure the banks activities outside its home relative to overall activity of other banks’ in the sample. The greater the global reach of the bank, the more difficult is it to coordinate its resolution and the more widespread the spill over effects from its failure.

(ii) Size: Size of a bank is measured using the total exposure that it has globally. This is the exposure measure used to calculate Leverage ratio. BASEL III paragraph 157 uses a particular definition of exposure for this purpose. The score of each bank for this criterion is calculated as its amount of total exposure divided by the sum of total exposures of all banks in the sample.

(iii) Interconnectedness: Financial distress at one institution can materially raise the likelihood of distress at other institutions given the contractual obligations in which the firms operate. Interconnectedness is defined in terms of the following parameters: (a) Inter-financial system assets (b) Inter-financial system liabilities (c) The degree to which a bank funds itself from the other financial systems.

(iv) Complexity: The systemic impact of a bank’s distress or failure is expected to be positively related to its overall complexity. Complexity includes: business, structural and operational complexity. The more complex the bank is the greater are the costs and time needed to resolve the banks.

Given these characteristics, it was important to apply different restrictions to keep the lending practices of the banks under control. Frivolous lending done by such SIFIs had resulted in the financial crisis 2008-09. Post the crisis, regulators became more vigilant about maintaining appropriate reserves for banks to survive macroeconomic stress scenarios. Three major sources of risks to which banks are exposed to are: 1. Credit Risk 2. Market Risk 3. Operational Risk. Several regulations

have been imposed on banks to ensure that they are adequately capitalised. The major regulatory requirements to which banks need to be compliant with are:

  1. BASEL 2. Dodd Frank Act Stress Testing 3. Comprehensive Capital Adequacy Review.

Before looking into the Regulatory frameworks and their impact on the Credit Risk modelling, let us form an understanding of the framework of the Bank Capital.

Risk Management in a Commercial Lending Portfolio with Time Series and Small Datasets – @Dexlabanalytics.

CAPITAL STRUCTURE OF BANKS

The bank’s capital structure is comprised of two main components: 1. Equity Capital of Banks 2. Supplementary capital of banks. The Equity capital of banks are the purest form of banking capital. This is true or the actual capital that a bank has and it has been raised from the shareholders. The supplementary capital of banks comprises of estimated capital such as allowances, provisions etc. This portion of the capital can easily be tampered by the management to meet undue shareholders expectations or unnecessarily over reserve capital. Thus, there are strong capital norms and regulations around the supplementary capital. The two tiers of capital are: Tier1 and Tier2 capital. Tier1 capital is also decomposed into two parts: Tier1 Common capital and Tier1 capital.

 

Tier1 common capital = Common shareholder’s equity-goodwill-Intangibles. Goodwill and intangibles are no physical capital. In scenarios, where the goodwill and intangible assets are stressed, the capital in the banks would deteriorate. Therefore, they cannot be added to the company’s tier1 capital. Only the core or the physical amount of capital present in the bank account is the capital.

Tier1 Capital = Total Shareholders’ equity (Common + Preffered stocks) -goodwill -intangibles + Hybrid securities.

Tier 1 is the core equity capital for the bank. The components of Tier1 capital are common across all geographies for the banking system. Equity capital includes issued and fully paid equities. This is the purest form of capital that the bank has.

Tier2 Capital: tier 2 capital comprises of estimated reserves and provisions. This is the part of capital which is used to cushion against expected losses. Tier 2 capital has the following composition:Tier 2 = Subordinated debts +Allowances for Loans and lease losses + Provisions for bad debts -> This portion of the capital is reserved out of profits. Hence,

managers always try to under report these parameters to meet shareholder’s expectations. However, under reserving often poses the chances of bankruptcies or regulatory penalties. Total Capital of a Bank = Tier 1 capital + Tier 2 Capital

Explaining the Everlasting Bond between Data and Risk Analytics – @Dexlabanalytics.

CALCULATION OF CAPITAL RATIOS

Every bank faces three main types of risks: 1. Credit risk 2. Market Risk 3. Operational risk. Credit Risk is the risk that arises from lending out funds to borrowers, given their chances of defaulting on loans. Market Risk is the risk that the bank faces due to market fluctuations like stock price changes, interest rate risk and price level fluctuation etc. Operational risk occurs as a failure of the operational processes. The exposure of the banks to these risks differ from bank to bank. So the capital that they to set aside would differ based on the exposure to risk. Therefore, regulators have defined a metric called Risk Weighted Assets (RWA) to identify the exposure of the bank’s assets to risk. Every bank must keep aside their capital relative to the exposure of their asset to risk. The biggest advantage of RWAs is that they not only include On-balance sheet items but off-balance sheet items as well. Banks need to maintain their Tier1 common capital, tier1 capital and tier2 capital relative to their RWAs. Thus, arises the Capital ratios.

 

Total RWA = RWA for Credit Risk + RWA for Market Risk + RWA for Operational Risk

Tier1 Common Capital Ratio = tier1 common capital / RWA (CR + MR + OR)

Tier1 Capital Ratio = Tier1 Capital / RWA (CR+MR+OR)

Total Capital Ratio = Total capital/ RWA(CR+MR+OR)

Leverage Ratio = Tier1 Capital / Firms consolidated assets

Regulators require some critical cut-offs for each of these ratios:

Tier1 Common Capital Ratio > = 2% all times

Tier1 Ratio >= 4% all times

Tier 2 capital cannot exceed Tier1 capital

Leverage ratio > = 3% of all times.

 

In the next blog we explore how the credit risk models help in ensuring the capital adequacy of the banks and in the business risk management.

 

Looking for credit risk analysis course online? Drop by DexLab Analytics – it offers excellent credit risk analysis course at affordable rates.

 

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Banks Merged With Fintech Startups to Perform Better Digitally

Axis Bank has acquired FreeCharge, a mobile wallet company opening doors to many such deals in the future. As a consequence, do you think banks and fintech startups have started working towards a common goal?

 
Banks Merged With Fintech Startups to Perform Better Digitally
 

On some day in the early 2016, Rajiv Anand, the Executive Director of Retail Banking at Axis Bank, asked his team who were hard at work, “Do present-day customers know how a bank would look in the future?”

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The Basics Of The Banking Business And Lending Risks:

The Basics Of The Banking Business And Lending Risks:

Banks, as financial institutions, play an important role in the economic development of a nation. The primary function of banks had been to channelize the funds appropriately and efficiently in the economy. Households deposit cash in the banks, which the latter lends out to those businesses and households who has a requirement for credit. The credit lent out to businesses is known as commercial credit(Asset Backed Loans, Cash flow Loans, Factoring Loans, Franchisee Finance, Equipment Finance) and those lent out to the households is known as retail credit(Credit Cards, Personal Loans, Vehicle Loans, Mortgages etc.). Figure1 below shows the important interlinkages between the banking sector and the different segments of the economy:

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Figure 1: Inter Linkages of the Banking Sector with other sectors of the economy

Banks borrow from the low-risk segment (Deposits from household sector) and lend to the high-risk segment (Commercial and retail credit) and the profit from lending is earned through the interest differential between the high risk and the low risk segment. For example: There are 200 customers on the books of Bank XYZ who deposit $1000 each on 1st January, 2016. These borrowers keep their deposits with the bank for 1 year and do not withdraw their money before that. The bank pays 5% interest on the deposits plus the principal to the depositors after 1 year. On the very same day, an entrepreneur comes asking for a loan of $ 200,000 for financing his business idea. The bank gives away the amount as loan to the entrepreneur at an interest rate of 15% per annum, under the agreement that he would pay back the principal plus the interest on 31st December, 2016. Therefore, as on 1st January, 2016 the balance sheet on Bank XYZ is:

dexlab-01

Consider two scenarios:

Scenario 1: The Entrepreneur pays off the Principal plus the interest to the bank on 31st December, 2016

This is a win – win situation for all. The pay-offs were as follows:

 

Entrepreneur: Met the capital requirements of his business through the funding he obtained from the bank.

Depositors: The depositors got back their principal, with the interest (Total amount = 1000 + 0.05 * 1000 = 1050).

Bank: The bank earned a net profit of 10%. The profit earned by the bank is the Net Interest Income = Interest received – Interest Paid (= $30,000 – $10000 = $20,000).

Credit Risk Analytics and Regulatory Compliance – An Overview – @Dexlabanalytics.

Scenario2: The Entrepreneur defaults on the loan commitment on 31st December, 2016

This is a drastic situation for the bank!!!! The disaster would spread through the following channel:

 

Entrepreneur: Defaults on the whole amount lent.

Bank: Does not have funds to pay back to the depositors. Hence, the bank has run into liquidity crisis and hence on the way to collapse!!!!!!

Depositors: Does not get their money back. They lose confidence on the bank.

 

Only way to save the scene is BAILOUT!!!!!

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The Second Scenario highlighted some critical underlying assumptions in the lending process which resulted in the drastic outcomes:

Assumption1: The Entrepreneur (Obligor) was assumed to be a ‘Good’ borrower. No specific screening procedure was used to identify the affordability of the obligor for the loan.

Observation: The sources of borrower and transaction risks associated with an obligor must be duly assessed before lending out credit. A basic tenet of risk management is to ensure that appropriate controls are in place at the acquisition phase so that the affordability and the reliability of the borrower can be assessed appropriately. Accurate appraisal of the sources of an obligor’s origination risk helps in streamlining credit to the better class of applicants.

Assumption2: The entire amount of the deposit was lent out. The bank was over optimistic of the growth opportunities. Under estimation of the risk and over emphasis on growth objectives led to the liquidation of the bank.

Observation: The bank failed to keep back sufficient reserves to fall back up on, in case of defaults. Two extreme lending possibilities for a bank are: a. Bank keeps 100% reserves and lends out 0%, b. Bank keeps 0% and lends out 100%. Under the first extreme, the bank does not grow at all. Under the second extreme (which is the case here!!!) the bank runs a risk of running into liquidation in case of a default. Every bank must solve an optimisation problem between risk and growth opportunities.

The discussion above highlights some important questions on lending and its associated risks:

 

  1. What are the different types of risks associated with the lending process of a bank?
  2. How can the risk from lending to different types of customers be identified?
  3. How can the adequate amount of capital to be reserved by banks be identified?

 

The answers to these questions to be discussed in the subsequent blogs.

Stay glued to our site for further details about banking structure and risk modelling. DexLab Analytics offers a unique module on Credit Risk Modelling Using SAS. Contact us today for more details!

 

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Transformation of Smartphones with AI

Transformation of Smartphones with AI

Once a science fiction fantasy, Artificial Intelligence is today’s resonating reality. People are already relishing myriad advantages through advanced mobile apps and smart-forever smartphones.

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Supposedly, smartphones made our lives easier. Not only does it allows us stay in touch with our beloved ones 24/7 but also allow us easy accessibility to a humungous amount of information over the internet, help us reach our designated destinations, play games, watch movies, check mails, and lot more.. And in the thick of all the telltales of new cameras and additional storage, AI is bringing in a poignant change in the realm of smartphone technology, which will impact our lives immensely.

Integrating AI with apps

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How would you feel when your phone opens INSTAGRAM, before you tapped on it? You will be elated! Isn’t it? We are already witnessing some basic versions of above-mentioned technology on some phones where the most-used apps pop up on the top of the screen. It’s no more a thing from a science fiction novel; Google Now would know everything about you – the way you use your phone, when you call your home, when you need to tap open a map app, or even the exact moment you feel like taking a photo. No more you have to arrange your home screen icons or click on the apps you need, because whenever you will unlock your phone, the app you want to open will launch automatically.

Mark your steps with AI

Google-Maps-gas-prices

 On the other hand, if we talk about mapping systems, you must have already come by Apple maps and Google maps that can predict your next whereabouts, based on past searches and destinations put into. In the near future, this technology will get cleverer intellectually. Making decisions based on your preferred routes, the type of public transport you board, how you react when you are stuck in traffic won’t be a tad difficult, provided Google has all the information it needs about you.

Say Hi to a digital assistant

02siri

Do you wonder at times, what if your phone becomes your best friend? Though it may sound creepy at first, but this is exactly the way towards which Artificial Intelligence is heading to. Digital assistants will be more like your best buddy who will be beside you on your happiest and worst days. If you feel stressed at work, your digital assistant will know how to uplift your mood or what kind of music to play to make you better..

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FELICITATIONS to the Personal assistant app

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How about having an inbuilt personal assistant app to do the flight bookings or order some selected items from your shopping cart? Sounds cool! From restaurant bookings and comparing gas-energy prices to sending smart replies, this personal assistant using the bounties of AI excels on a bouquet of jobs.

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Fulfilling software programs like Cortana, Siri and Google Now have already started bridging the gap between them and real-life personal assistants. In the future, this gap will further be lessened and these apps will finally be able to do many smart functions.

Get the best credit risk modeling training with our specialists at DexLab Analytics. Credit risk modelling certification course is in great demand now, so come to us and enrol.

 

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What Sets Apart Data Science from Big Data and Data Analytics

What Sets Apart Data Science from Big Data and Data Analytics

Today is a time when omnipresent has a whole new definition. We no longer think about the almighty, omnipotent and omnipresent God when we speak about being everywhere. Nowadays we mostly mean data when we hear the term “present everywhere”. The amount of digital data that populates the earth today is growing at a tremendous rate, doubling over every two years and transforming the way we live.

As per IBM, an astounding amount of 2.5 Billion gigabytes of data is generated every day since the year 2012. Another revelation made by an article published in the Forbes magazine stated that data is growing faster than ever before today, and by the year 2020 almost 1.7 megabytes of new information will be created every second by every human being on this earth. And that is why it is imperative to know the fundamental basics of this field as clearly this is where our future lies.

In this article, we will know the main differentiating factors between data science, Big Data analysis and data analytics. We will discuss in detail about the points such as what they are, where they are used, and the skills one needs to be a professional in these fields, and finally the prospect of salary in each case.

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First off we start with the understanding of what these subjects are:

What is data science?

Data science involves dealing with unstructured and structured data. It is a field that consists of everything that relates to cleansing of data, preparation and analysis. It can be defined as the combination of mathematics, analytics, statistics, programming, capture of data and problem solving. And all of that in the most ingenious ways with an amazing ability to look at things from a unique perspective. They professionals involved with this field should be proficient in data preparation, cleansing, and alignment of data.

To put it simply, this is the umbrella of techniques which is used to extract insights and information from the data.

What do we mean by Big Data?

As the name suggests, Big Data is nothing but a mammoth amount of data. This is so huge that it cannot be processed effectively with the existing traditional applications. The processing of Big Data starts with working with raw data that is not very well aggregated and is almost impossible to store in the memory of only one single computer.

It is now a popular buzzword filling up the job portals with vacancies. And is used to denote basically a large number of data, both structured and unstructured. It inundates a business on a daily basis. It is a prime source of information that can be used to take better decisions and proper strategic business moves.

As per Gartner, Big Data can be defined as high velocity, high volume and high variety information assets which demand cost efficient, innovative forms of information processing that enable improved insight, better decision making, and a procedural automation.

Thus a Big Data certification, can help you bag the best paying jobs in the market.

Understanding data analytics:

Data Analytics is the science of assessing raw data with the purpose of drawing actionable insights from the same.

It basically involves application of algorithms in a mechanical and systematic process to gather information. For instance, it may involve a task like running through a large number of data sets to look for comprehensible correlations between one another.

The main focus for data analytics is concentrated on interference, which is the procedure for deriving conclusions which are mainly based on what the researchers already are aware of.

Where can I apply my data science skills?

  • On internet searching: search engines use data science algorithms
  • For digital ads: data science algorithms is an important aspect for the whole digital marketing spectrum.
  • Recommender systems: finding relevant products from a list of billions available can be found easily. Several companies and ecommerce retailers use data to implement this system.

Big Data applicability:

The following sectors use Big Data application:

  • Customer analysis
  • Fraud analytics
  • Compliance analytics
  • Financial services, credit risk modelling
  • Operational analytics
  • Communication systems
  • Retailers

Data analysis scope and application:

  1. Healthcare sector for efficient service and reduction of cost pressure
  2. Travel sector for optimizing buying experience
  3. Gaming industry for deriving insights about likes and dislikes of gamers
  4. For management of energy, with smart grid management, energy optimization distribution and also used by utility companies.

Here is an infographic that further describes all there is to know about these trending, job-hungry sectors that are growing at a tremendous rate:

Don’t Be Bamboozled by The Data-Jargon: Difference in Detween The Data Fields

 

Now that you know what the path to career success, looks like stop waiting and get a R Analytics Certification today.

 

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