A slew of federal and state actions aimed at easing the financial burden on Americans amid the COVID-19 pandemic has upended traditional metrics that the financial-services industry relies upon to assess credit performance.
The upheaval is accelerating the need for banks to expand the data and develop improved methodologies to analyze creditworthiness, including evaluating deposit and cash-flow behavior. This will provide a significant advantage to lenders that hold the core deposit and spending accounts of their customers.
Alan Schiffres is President of Avalon Group Advisors, LLC, which is focused on consumer and small business credit risk policy, analytics and management. Mr. Schiffres is a paid advisor to Novantas.