Credit Risk Measurement remains a critical field of top priority in banking and financial services industry. Credit risk refers to the probability of loss due to a borrower’s failure to make payments on any type of debt. Normally, a typical credit underwriting process is using human judgment as credit decision making tools. Nowadays, banking and financial services industry is considering to use machine for making those credit decision. By using machine learning algorithm, banking and financial services institution could use more robust statistical approach rather than human judgment in day to day underwriting process. Hence, probability of default of a customer could be measure in timely manner and with better accuracy. Underwriting process then will become more effective and efficient. This research will also apply machine learning as process for optimizing company’s profitability through operational effectiveness arising from machine learning implementation as decision making process. Banks or financial services institution could get additional benefit from minimizing total acquisition cost arises from field survey activities, collection assignment and even specific target customers based on risk profile for sales and marketing activities. Risk based pricing could also be implemented in real time scenario, so company could apply different pricing for each customer based on it’s risk profile. As conclusion, profitability will significantly increase by simply using machine learning algorithm in credit decision making process and operational efficiency.
Ahmad Fakih Ijtihadi
Head of Risk Management
My current employment position is Head of Risk Management at Mandala Multifinance, a company specialized in Financial Services Industry, with main responsibility in optimizing big data capabilities and implementing various machine learning methodology for Credit underwriting process as well as other operational activities. Before I joined Mandala Multifinance in 2018, I had worked in several similar companies like Mandala Multifinance. I was with FIFGROUP (2016 – 2018), Nissan Finance (2014 – 2016) and Bank BCA Sharia (2010 – 2014), with various roles and responsibilites but mainly focus on Risk Management area including Credit Risk, Market Risk, Operational Risk, Risk Assessment, Risk Analysis and Predictive Modelling. I also had worked as Sales Engineer at Donaldson Indonesia which is specialized in Industrial Air Filter and Dust Collector System. Currently I also lecturer in Ahmad Dahlan Business School Jakarta (2016 – 2018) and University of Muhammadiyah Jakarta (2016 -2018), both giving lecture for Risk Management and Statistics subject. Besides strong passion Data Science and Data Analytic, my interest in teaching that leads to my career as Lecturer.