AI In Credit Scoring Market Size, Share and Trend Analysis, By Component (Software, Service), Deployment (On-premise, Cloud, Hybrid), By End-Use (Banking, Financial Services, and Insurance (BFSI), Fintech, E-Commerce, Others), and By Region, Forecast 2024-2031

Global AI in credit scoring market overview and key insights:

The global AI In credit scoring market size reached USD 1,730.7 Million in 2023 and is expected to register a revenue CAGR of 23.7% during the forecast period. Rising disposable income in advanced and emerging economies is a major factor driving the market revenue growth of AI in credit scoring market. A substantial number of consumers in these regions are witnessing higher levels of disposable income, and purchasing power. Banking, financial services and insurance (BFSI) are experiencing demand in financial products.

Market Drivers:

Globally financial institutions are leveraging AI-based credit scoring systems to assess credit score of customers more efficiently. AI tools in credit scoring provide accurate insights into credit patterns by analyzing a broader range of data points, including non-traditional metrics, improving the chances of approving loans for individuals with limited credit history. This enhanced capability allows lenders to reduce average screening times, and enhance the overall customer experience.

According to the Organization for Economic Co-operation and Development (OECD), In 2022, The United States leads the world in average disposable income, with an average of USD 54,854 in gross disposable income. Luxembourg ranks second with USD 49,860, followed by Switzerland at USD 43,035. Completing the top five are Australia, with an average disposable income of USD 42,547, and Germany, close behind at USD 42,433.

Market Opportunity:

Strategic collaboration between banking, financial services and insurance (BFSI) and major fintech companies are projected to generate significant opportunities within the AI in Credit Scoring market. Traditional banking, financial services and insurance (BFSI) companies are incorporating innovative fintech technologies, which are enhancing the efficiency and accuracy of credit assessment processes.

For instance, On February 2024, a prominent competitor in AI in credit scoring market Pagaya Technologies partners with Minneapolis, U.S., based lender US Bank, to implement artificial intelligence (AI) within its credit decisioning processes for personal loan applications. Additionally, on May 2024, M&T Bank Corporation partners with Rich Data Co. for enhance its understanding of cash flow stability, evaluate credit risk, and assess lending opportunities.

Recent Trends:

Real-time credit scoring is a major trend in the AI in Credit Scoring market. End-use industries such as BFSI, fintech and e-commerce companies are integrating advanced AI algorithms and machine learning techniques to analyse real-time data, which is allowing lenders to generate instant credit decisions. For instance, on October 2024, AperiData launched its real-time Open Banking credit score, AperiScore, to effectively predicts applicant’s likelihood of repayment and produces a corresponding score.

Moreover, real-time credit scoring promotes financial inclusion by enabling lenders to assess customer’s credit histories. Financial institutions are rapidly adopting this technology to boost sales of credit cards and instant loan products. These factors are expected to accelerate the market revenue growth over the forecast period.

Restraints & Challenges:

Concerns regarding data privacy and security is a major restraining factor of AI in credit scoring market. Financial institutions across globally highly depends on AI algorithms that analyse large amounts of personal and financial data. According to the Federal Bureau of Investigation (FBI), In 2023, the IC3 recorded an unprecedented number of complaints from the American public, totalling 880,418, with potential losses surpassing USD 12.5 billion. This marks an increase of nearly 10% in complaints and a 22% rise in losses compared to 2022.

Furthermore, regulators are increasingly imposing stringent data protection rules such as the European General Data Protection Regulation (GDPR), California Consumer Privacy (CCPA) and other privacy laws. These rules come with strict guidelines on how organizations manage data practices, representing a challenge in the deliverability of artificial intelligence (AI) solutions. Financial institutions might face significant challenges in meeting those regulations, which tend to require heavy spending on data security.

Component Segment Insights and Analysis:

Based on the component, the AI In Credit Scoring Market is segmented into software and services.

Software segment contributed largest revenue share in 2023.  Increasing adoption of artificial intelligence (AI) in credit scoring is a major key contributor of revenue share in 2023. AI-powered platforms enabling lenders to analyze both traditional and alternative datasets for filtering credit profiles. This enhanced analytical capability improves risk assessment and speeds up loan approvals. Sophisticated digital solutions have become crucial for financial services.

Services segment is expected to register fastest revenue growth over the forecasted period. Service providers are playing critical role in helping lenders to incorporate AI-powered solution with legacy systems by ensuring seamless operations and compliance with regulatory requirements. Globally, banking, financial services, insurance (BFSI) companies are incorporating AI in credit assessing consulting and training services to enhance operational efficiency and customer experience which are further expected to propel growth of the market.

End-Use Segment Insights and Analysis:

Based on the end-use, the AI In credit scoring market is segmented into banking, financial services, and insurance (BFSI), fintech, e-commerce and others.

Banking, financial services, and insurance (BFSI) segment contributed largest revenue share in 2023. BFSI institutions are increasingly deploying AI-enabled technologies to precisely assess credit limit of underserved consumers. The rising adoption of AI-enabled software and services helps to automate credit lending process and reduce processing time has accelerated a broader customer base.

For instance, On April 2024, Myanmar based Kanbawza (KBZ) bank, collaborated with Singapore-based AI credit scoring company FinbotsAI to enhance its credit risk management capabilities. KBZ Bank will implement FinbotsAI’s advanced credit modeling platform to evaluate the creditworthiness of applicants across retail and SME products with greater accuracy and efficiency.

Fintech segment is expected to register fastest revenue growth over the forecasted period. Consumers across globally are increasingly adopting fintech application owing to rising internet penetration. According to the International Telecommunication Union (ITU), 67% of the global population, equivalent to 5.4 billion people, is now online. This witnessed a significant 4.7% growth since 2022, a notable growth compared to the 3.5% increase registered between 2021 and 2022.

Additionally, fintech companies are leveraging advanced machine learning algorithms and alternative data sources such as utility payments, social media activity, and transaction histories to assess credit scores of consumers, which are expected to generate market revenue growth over the forecast period.

Geographical Outlook:

North America is registered highest market share in AI in credit scoring market. Rising usage of online banking is a key driving factor driving growth of the market in this region. According to a national survey of the American Bankers Association (ABA), consumers are increasingly adopting digital banking channels. Over the past 12 months, 48% of bank customers identified mobile apps on phones or other devices as their primary method for managing bank accounts, while 23% preferred online banking through laptops or PCs. Also, per capita disposable income is rising in the U.S., which as a result are accelerating the growth of AI in credit scoring market. According to the U.S. Federal Reserve Bank, the per capita disposable personal income in the US was USD 61,296.

Moreover, the rise of fintech companies in North America has intensified competition of incorporating AI in financial services products. These strategies by fintech companies are promoting traditional banks to incorporate AI technologies to retain market share. This competitive environment encourages investments in AI solutions, leading to increased revenue streams for BFSI and fintech companies. Regulatory bodies are further promoting the transparency and fairness in lending practices. As a result, the demand for reliable AI-driven credit scoring systems is expected to grow significantly in this region.

Asia Pacific is expected to register the fastest market revenue growth in AI in Credit Scoring Market by 2031. Asia-Pacific is a key hub for fintech innovation, with rapidly expanding companies across major markets such as China, India, Singapore, South Korea, and Japan. Rising digital transaction and requirement for instant credit in this region is expected to accelerate the market revenue growth. According to the World Economic Forum, the Asia-Pacific region has the potential to become a USD 1 trillion digital economy by 2030.

Major BFSI and fintech companies in this region are significantly investing in AI in credit scoring which are further fueling growth of the market. For instance, On November 2024, PFC Technologies collaborated with PEFINDO Credit Bureau to develop an AI-driven credit scoring system and model. Additionally, AND Solutions partners with PT AEON to utilize AND Solutions’ advanced credit scoring platform to automate PT AEON Credit Service Indonesia’s credit screening processes.

Europe is expected to register steady revenue growth over the forecast period. Rising lending to companies is a key factor accelerating market revenue growth of AI in credit scoring market in Europe. According to the European System of Central Banks (ESCB), the Europe saw an annual growth rate of 1.2% in loans to companies, with the total loan volume reaching USD 5.61 trillion as on October 2024. Additionally, rapid investments in new product development in AI in credit scoring are further expected to accelerate market revenue growth. For Instance, On August 2024, UK-based Okredo has secured USD 1.31 million in funding to develop AI/ML driven scoring system.

Competition Analysis:

The AI in credit scoring market is characterized by a fragmented structure, with several players competing across various segments and regions. List of major players included in the AI in credit scoring market report are:

• FICO
• Experian PLC
• Equifax Inc. 
• TransUnion
• Zest AI
• Lenddo EFL
• Fintech Galaxy Limited
• Worth AI
• Scienaptic AI
• Pagaya Technologies Ltd
• Rich Data Co.
• Credit Sesame
• Aperidata Limited
• FinbotsAI
• AND Solutions PTE Ltd. 


Strategic Developments in AI In Credit Scoring Market:

• On 23^rd April 2024, Fintech Galaxy partners with Singapore-based fintech company FinbotsAI to develop advanced credit profiling solutions. This solution utilizes AI models and aggregated open banking data to revolutionize applications such as credit scoring and risk assessment across the MENA (Middle East and Northern Africa) region.
• On 3^rd January 2024, Scienaptic AI partners with DigiFi increase the adoption of AI in lending and provide more individuals with access to equitable credit. Integrating DigiFi’s loan origination system with Scienaptic’s AI-driven signals, financial institutions can automate their lending processes, approve a greater number of loans, and enhance credit availability for their customers.

Key Advantages for Stakeholders:

Navistrat Analytics’ industry report provides an in-depth quantitative analysis of various market segments, historical and current trends, market forecasts, and dynamics within the global market. The historical years covered in this report are 2021 to 2022, with 2023 serving as the base year for market size calculations. The forecast period extends from 2024 to 2031.

The report includes an executive summary and a comprehensive overview of market drivers, restraints, opportunities, and challenges (DROC), along with insights into regulatory standards. It features detailed analyses such as PORTER’s Five Forces, SWOT, and PESTLE, as well as assessments of technological trends and the competitive landscape.

PORTER’s Five Forces analysis helps stakeholders evaluate the impact of new entrants, competitive rivalry, supplier power, buyer power, and substitution threats, enabling them to assess the level of competition and the attractiveness of the global market. The competitive landscape provides stakeholders with a clear understanding of the current market positions of key players, offering valuable insights into their competitive environment.

Scope and key highlights of the AI in credit scoring market report:

The AI in credit scoring market report offers a detailed analysis of market size, including historical revenue (in USD Million) data for 2021-2022 and revenue forecasts for 2024-2031 across the following segments:

• Component Outlook (Revenue, USD Million; 2021-2031)
  • Software
  • Services

• Deployment Outlook (Revenue, USD Million; 2021-2031)
  • On-premise
  • Cloud
  • Hybrid

• End-Use Outlook (Revenue, USD Million; 2021-2031)
  • Banking, Financial Services, and Insurance (BFSI)
  • Fintech
  • E-Commerce
  • Others

• Regional Outlook (Revenue, USD Million; 2021-2031)
  • North America
    • U.S.
    • Canada
    • Mexico
  • Europe
    • Germany
    • France
    • U.K.
    • Italy
    • Spain
    • Benelux
    • Nordic Countries
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Singapore
    • South Korea
    • Oceania
    • ASEAN Countries
    • Rest of APAC
  • Latin America
    • Brazil
    • Rest of LATAM
  • Middle East & Africa
    • GCC Countries
    • South Africa
    • Israel
    • Turkey
    • Rest of MEA

Frequently Asked Questions (FAQ) About The AI In Credit Scoring Market Report