ASIC ‘excited’ by regtech solutions in responsible lending

Regtech solutions that help lenders and brokers more efficiently assess credit files and risk profiles have “the potential to improve performance across the lending industry”, the financial services regulator has said.

On Thursday (20 August), the Australian Securities & Investments Commission (ASIC) hosted a regulatory technology (regtech) demonstration webinar on responsible lending with members of the lending and broking industry.

For the webinar, ASIC had provided regtech providers with 20 hypothetical loan files (including mortgage applications) which contained incomplete, deficient, or inconsistent data.

The regtechs (Skilful Analytics Responsible Lending Review tool, Enteruptors and Advice RegTech’s SAMI tool) then demonstrated how their solutions could identify the issues in the loan files of the borrowers by utilising artificial intelligence, natural language processing, machine learning and – in some cases – by overlaying psychometric and behavioural analytics to flag whether any borrowers may be deemed higher risk.

The purpose of the demonstration was to showcase how technology can analyse the contents of a consumer loan file to ensure and enhance compliance with responsible lending obligations and the incoming Best Interests Duty (by enabling consideration and decision capture of whether mortgage brokers and credit licensees have acted in the best interests of consumers).

It was noted that while regtech can support credit decisioning, it is meant to support those assessors and risk officers in their decision making, not to replace it altogether.

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Source: ASIC ‘excited’ by regtech solutions in responsible lending – Mortgage Business