Banking as an industry hasn’t seen major disruption in decades. Certainly there have been improvements and enhancements along the way, but the fundamental process of banking is the same as it was 40 years ago. Given the incredible leaps in computer technology that we’ve made over the past decades, this makes no sense. Financial services are a key part of modern life: We can, and should, do more to innovate in this industry.
Take consumer lending: There’s been virtually no major innovation in credit underwriting, the process of judging loan eligibility, since the 1970s.
In the early-1970s, Fair Isaac rose to global prominence as a provider of the FICO score, which supplanted much of the credit officers’ role. The standardized score massively increased credit availability and thereby lowered the cost of borrowing. This was the last radical transformation of consumer finance.