National Policy Banks Also Promote Automation of Corporate Credit Screening

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Corporate Finance Automated Screening System to Be Introduced as Early as Next Year

(From the left) Headquarters of Korea Eximbank and IBK Industrial Bank. (Photo by each company)

[Asia Economy Reporter Jin-ho Kim] National policy banks pursuing digital transformation are accelerating the introduction of automated corporate credit screening systems. It is expected that the introduction of systems utilizing artificial intelligence (AI) and big data will minimize problems that may arise during screening through the standardization of procedures.

According to the financial sector on the 9th, the Export-Import Bank of Korea and IBK Industrial Bank of Korea recently commissioned consulting services for the introduction of automated corporate credit screening systems. The automated corporate credit screening system is structured to automatically collect industry information related to corporate credit as well as the financial and non-financial information of companies for screening.

The Export-Import Bank of Korea has decided to introduce an automated corporate finance screening system considering the bank’s business characteristics centered on export companies. To this end, the design of the automated screening model will reflect the objectives of policy finance and product characteristics. The bank plans to conduct consulting in the second half of this year and introduce the related system as early as next year. This project is being led by the Export-Import Bank’s Digital Transformation Promotion Team.

IBK Industrial Bank of Korea will also develop a corporate soundness diagnosis model utilizing the big data it has accumulated so far. The core is to develop differentiated models such as whether to apply screening indicators tailored to individual company characteristics like asset size and industry. A scoring model to determine the soundness level of companies will also be prepared.

The push by national policy banks to introduce automated corporate credit screening systems is analyzed as a meaningful move considering that digital transformation has emerged as a key issue in the banking sector. In the case of commercial banks, related systems have already been introduced since 2017. After Hana Bank was the first commercial bank to introduce such a system, Woori Bank and KB Kookmin Bank are also operating automated corporate credit screening systems.

Until now, the corporate credit screening process has mostly been conducted manually. This is because it is difficult to quantitatively handle factors such as economic trends, industry conditions, and licensing restrictions beyond what is shown in financial statements. However, since the work is done manually, errors can occur, and the large amount of reference information has led to longer screening periods.

National policy banks expect that the introduction of automated corporate credit screening systems will minimize judgment errors that may occur during screening through the standardization of procedures. They also pay attention to the effect of being able to quickly confirm screening results and reduce the burden of screening tasks.

A representative of a national policy bank explained, "The introduction of standardized screening processes and the use of quantitative and objective screening information will greatly enhance risk management functions."

This content was produced with the assistance of AI translation services.