INSTITUTIONAL investors are questioning the quality of alternative lenders’ credit risk assessment, amid rising defaults and macroeconomic uncertainty.
Gabriele Sabato, chief executive of small- and medium-sized enterprise (SME) credit assessment platform Wiserfunding, told Peer2Peer Finance News that an increasing number of institutions had contacted them in recent months, “to validate what the lender is saying in terms of quality of originations”.
Sabato, who was previously head of risk appetite portfolio decisioning at RBS, attributed the increased institutional scrutiny over credit assessment methods to the worsening of economic conditions.
“SMEs are feeling the turn in the economy across Europe that has been accelerating in the past three months,” he said.
“Alternative lenders have grown at exceptional rates over the past five years.
“When the economy turns, we will really see the underlying quality of these loans.”
Wiserfunding was co-founded by Sabato and Professor Edward Altman, a US academic specialising in distressed debt markets. The online platform uses Artificial Intelligence to help assess the credit risk of SMEs, looking at factors such as corporate governance, management capacity and macroeconomic outlook. Clients include peer-to-peer finance platforms and other alternative lenders.
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