Global credit events: trends and outlook 2023

We identified, analyzed and then evaluated over 375 digital credit events from more than 50 countries across five continents in 2022.

Based on these events and findings, we have derived the following five theses for the credit year 2023:

  1. Green finance is establishing itself and becoming a challenge.
    Credit institutions will continue to offer more and more forms of sustainable financing for both corporate and retail customers. ESG reporting effort will become a major challenge and will require new solutions to enable institutions to handle this additional burden.
  2. The focus of digital E2E lending processes is on credit analysis, lending decisions and contract conclusion.
    Banks need to question their own processes and ensure the interplay of redesigned digital solutions along the lending process and their core banking systems.
  3. The use of artificial intelligence in the lending business will take a big leap forward in the near future.
    The application areas of AI such as ChatGPT in lending have not yet been identified. We expect rapid advancement thanks to AI technology, especially in terms of increasing process efficiency.
  4. The big BNPL hype is over, but the payment option has established itself.
    BNPL is slowly shedding its status as an innovation in B2C – the macroeconomic environment as well as strict regulation will considerably change the market. First players are venturing into B2B BNPL business.
  5. Lending platforms will continue to grow.
    The strategic integration of platform business and its technical and organizational operationalization are continuing to gain importance in banks.

Global credit events can be categorized into six groups:

  • Green finance
  • Digital E2E lending
  • Data-driven lending
  • Lending platforms and ecosystems
  • Buy Now, Pay Later
  • Decentralized finance lending

In addition, the innovation driver financial inclusion has been identified. 

Green finance: We have seen an increase in the number of green loans granted. Financing contracts whose terms are linked to sustainability criteria were also increasingly found in 2022. A large number of events relate to the increasing regulatory requirements.

“Adding ESG and sustainability topics to credit advisory offerings and processing steps as well as the product range requires specific action by banks.”

Bastian Walkhoff, Senior Manager, zeb

Financial inclusion – a driver of innovation: Although financial inclusion was not classified as a topic of its own, it was identified as a key driver for E2E lending and data-driven lending. Financial inclusion refers to measures aimed at approaching and attracting customers who have not previously been focused on by banks and financial services providers – often due to factors that result in a negative assessment of debt servicing capability or creditworthiness when applying traditional evaluation criteria.

Digital E2E lending: While in previous years the attention was on digital loan offerings, we observed a focus on the digital conclusion of loan agreements in 2022.

Data-driven lending: This term refers to the efficient use of all available data along the customer journey in the lending process. In 2022, artificial intelligence and machine learning were increasingly used in the lending business to issue individualized loan offers or to rate creditworthiness and perform debt servicing capability checks based on alternative data.

“Based on artificial intelligence, we will see various specific use cases at banks and fintech companies in the area of optimized real-time lending in 2023.”

Julian Popp, Consultant, zeb

Lending platforms and ecosystems: With various platform types (comparison sites, sales platforms and credit marketplaces), financial institutions have developed their own solutions or entered into cooperations.

Buy Now, Pay Later: This describes installment financing that is usually offered free of interest and charges. A large proportion of events in 2022 were funding rounds of fintech companies looking to enter the BNPL market – or entries of established players previously not active in this area.

Decentralized finance lending: DeFi lending refers to the interaction of lenders and borrowers via a distributed, decentralized system that does not require a central third-party intermediary for financial services. Due to various fraud scandals and cyberattacks, trust in cryptocurrencies was shaken in 2022.

We look forward to an exciting credit year 2023 and are always happy to share further insights with you or answer your questions.