AI-Based Credit Risk Evaluation in FinTech Applications

Abstract

Financial Technology (FinTech) has transformed banking and lending by enabling fast, accessible, and scalable digital credit services. As digital lending expands, traditional credit assessment methods are becoming less effective in analyzing complex borrower behaviors and alternative data sources. Artificial Intelligence (AI) has emerged as a powerful solution for credit risk assessment, utilizing machine learning, deep learning, predictive analytics, and natural language processing to evaluate borrower risk more accurately. This study examines AI-based credit risk assessment techniques in FinTech, focusing on credit scoring models, automated underwriting, big data analytics, and real-time risk monitoring. The proposed framework includes data preprocessing, feature engineering, model training, and risk classification. Findings indicate that AI-driven models significantly improve prediction accuracy, fraud detection, risk segmentation, and loan approval decisions compared to traditional methods. Ensemble learning and deep neural networks demonstrate strong performance in large-scale credit assessment tasks. AI also promotes financial inclusion by leveraging alternative data for individuals with limited credit histories. However, challenges related to model transparency, algorithmic bias, data privacy, and regulatory compliance remain. Overall, AI-powered credit risk assessment is a key driver of intelligent, customer-centric, and sustainable FinTech lending systems.