AI-Powered Risk Assessment and Credit Scoring: Revolutionizing Banking with Artificial Intelligence

Abstract

In recent years, artificial intelligence (AI) has transformed many sectors, with banking being one of the most impacted industries. Traditional methods of risk assessment and credit scoring are rapidly evolving through the integration of AI and machine learning technologies. This paper explores the advancements in AI-powered risk assessment and credit scoring, highlighting how AI enhances accuracy, fairness, transparency, and operational efficiency. The study delves into alternative data utilization, explainable AI techniques, ethical considerations, and future challenges. The potential of AI to democratize access to credit, reduce financial exclusion, and improve risk management frameworks is emphasized, alongside the necessity of robust governance and regulatory oversight. Also, introducing new research areas in this field is one of the goals of this article.