The year ahead presents a heightened risk environment of inflation, economic uncertainty, and credit stress with the potential to impact the lenders’ portfolios, according to our latest report with insights from Australian risk experts.

Our latest annual Risk Radar report gathers insights from risk experts at Australia’s biggest banks and fintechs. The top finding from the report was almost two-thirds (63%) of respondents identify acquiring new customers responsibly as number one on their risk priorities list in the current environment.

This comes during a particularly tumultuous economic climate with Roy Morgan data released this month showing 23.9% of mortgage holders were at risk of mortgage stress in the three months to December 2022, above the long-term average of 22.8% stretching back to 2007. Risk Radar respondents identified the top influences on risk strategy as the Reserve Bank of Australia’s ongoing cash rate rises, increasing interest rates and inflation (27%) as well as property prices and the broader Australian housing market (16%).

Experts pointed to digital transformation as the best way to manage priority risks, with the top three priorities for customer acquisition: increasing automation, increasing speed and accuracy of risk decisions and harnessing more insights from existing data. Yet, budget cuts and slow to move innovation see technology investment lagging as 1 in 4 risk leaders say that legacy systems are limiting their access to data and 1 in 5 say that there are limited funds available for the type of tech investment required to adequately manage priority risks.

Leading risk expert Paul Abbey from Abbey Consulting Group said:

“Modernising technology and decision systems can be hard, but the future benefits to customer experience, risk management and reducing opportunity cost should not be underestimated.”

Jordan Harris, Head of Innovation for Experian Digital said: “Digital innovation is the critical enabler to allow lenders to make personalised customer management decisions at scale. There will always be budget pressure and the challenge is deciding where to place your bets. This feels like a key space for the coming years.

“Technologies such as Artificial Intelligence, Machine Learning and data and analytics are no longer emerging, they’re commonplace and investment in them is no longer innovative, it’s the price of entry.

“Even in the face of a tough economic environment for the year ahead, a continued commitment to tech investment plays an important part in the digital transformation journey. That is why it was pleasing to see National Australia Bank recently announcing a technology strategy heavily centred on data and extracting meaningful and actionable insights.”

Download the last Risk Radar report for more insights.

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