Experian Unveils New AI Tool for Managing Credit and Risk Models

Experian launched a new artificial intelligence-powered tool.

Experian Assistant for Model Risk Management is designed to help financial institutions better manage the complex credit and risk models they use to decide who gets a loan or how much credit someone should receive. The tool validates models faster and improves their auditability and transparency, according to a Thursday (July 31) press release.

The tool helps speed up the review process by using automation to create documents, check for errors and monitor model performance, helping organizations reduce mistakes and avoid regulatory fines. It can cut internal approval times by up to 70% by streamlining model documentation, the release said.

It is the latest tool to be integrated into Experian’s Ascend platform, which unifies data, analytics and decision tools in one place. Ascend combines Experian’s data with clients’ data to deliver AI-powered insights across the credit lifecycle to do things like fraud detection.

Last month, Experian added Mastercard’s identity verification and fraud prevention technology to the Ascend platform to bolster identity verification services for more than 1,800 Experian customers using Ascend to help them prevent fraud and cybercrime.

The tool is also Experian’s latest AI initiative after it launched its AI assistant in October. The assistant provides a deeper understanding of credit and fraud data at an accelerated pace while optimizing analytical models. It can reduce months of work into days, and in some cases, hours.

Experian said in the Thursday press release that the model risk management tool may help reduce regulatory risks since it will help companies comply with regulations in the United States and the United Kingdom, a process that normally requires a lot of internal paperwork, testing and reviews.

As financial institutions embrace generative AI, the risk management of their credit and risk models must meet regulatory guidelines such as SR 11-7 in the U.S. and SS1/23 in the U.K., the release said. Both aim to ensure models are accurate, well-documented and used responsibly.

SR 11-7 is guidance from the Federal Reserve that outlines expectations for how banks should manage the risks of using models in decision making, including model development, validation and oversight.

Similarly, SS1/23 is the U.K. Prudential Regulation Authority’s supervisory statement that sets out expectations for how U.K. banks and insurers should govern and manage model risk, especially in light of increasing use of AI and machine learning.

Experian’s model risk management tool offers customizable, pre-defined templates, centralized model repositories and transparent internal workflow approvals to help financial institutions meet regulatory requirements, per the release.

“Manual documentation, siloed validations and limited performance model monitoring can increase risk and slow down model deployment,” Vijay Mehta, executive vice president of global solutions and analytics at Experian, said in the release. With this new tool, companies can “create, review and validate documentation quickly and at scale,” giving them a strategic advantage.

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