Lending business until 2030: strategic challenges – between algorithm and aspiration

What are the opportunities and risks of algorithmic credit with regard to AI?

Artificial intelligence (AI) is no longer a topic for the future – it has become a reality in the lending business. From automated credit checks and scoring models to dynamic pricing, AI not only changes processes but also the logic behind decision-making. In its current regulation, BaFin explicitly recognizes the need to integrate models and algorithms into risk management – subject to the principles of transparency, traceability and governance.

The challenge is not technology, but responsibility. How can algorithmic decisions be explained? How can discrimination be avoided? And how can an institution ensure that it maintains control over its own systems?

The answer lies in a new strategic paradigm: technological sovereignty. Banks must not only use AI but also understand it, govern it and be accountable for it. MaRisk therefore explicitly requires robust procedures for model validation, data quality assurance and risk data aggregation.

How are customer expectations in the lending business changing?

The customers of tomorrow are not merely digital-savvy – they are well-informed, organized in networks and demanding. They expect not only credit decision-making in real time but also transparency regarding the criteria used to make it. Traditional in-branch advisory meetings are becoming the exception, while digital interaction is becoming the norm.

This development presents banks with a double challenge: on the one hand, they must radically digitalize their processes and, on the other, foster trust in increasingly automated interactions. This requires intuitive interfaces, personalized offers and communication that is perceived as trustworthy even when the decision-maker is an algorithm.

To what extent does regulation serve as a strategic framework for the lending business?

MaRisk

What requirements do the MaRisk amendments place on the lending business from a national and European perspective?

BaFin’s latest MaRisk amendments represent more than a regulatory update – they serve as a strategic compass for future risk management. Particularly relevant for the lending business are the requirements for:

• the segregation of functions and voting in the credit process (BTO 1.1),
• the early detection of risks and forbearance measures (BTO 1.3),
• the risk classification procedure (BTO 1.4) and
• the use of models and their validation (AT 4.3.5)^[1].

These requirements aim not only at stability, but also at resilience – a term that is gaining new strategic significance in the age of AI and cyber risks.

EBA guidelines

What are the guidelines on lending and credit monitoring, and how do they contribute to harmonization at the European level?

With its guidelines on loan origination and monitoring (EBA/GL/2020/06), the EBA has created a uniform framework that goes far beyond national requirements. Particularly noteworthy are:

• requirements for credit scoring, including the use of automated procedures,
• transparency obligations towards customers and
• governance requirements with regard to the use of AI and big data.

These guidelines are not optional – they are especially binding for large institutions supervised by the ECB and are consistently enforced by the ECB as part of the SSM (Single Supervisory Mechanism).

ECB

How does the ECB focus its supervisory practices on digital risks in the lending business, and what are the strategic priorities resulting from this?

The ECB has a clear focus on digital risks in its supervisory practice. In its annual supervisory priorities, it regularly emphasizes the importance of:

• IT and cyber risks,
• the governance of AI systems and
• strategic management of credit risks in a volatile environment.

Banks must therefore ensure that the strategic orientation of their lending business aligns with regulatory frameworks – not only nationally but also at the European level.

What strategic imperatives must banks fulfill by 2030?

These developments give rise to four strategic imperatives for banks in order to successfully shape the transformation in the lending business.

I) Building technological sovereignty

Banks must retain control over their technologies. This means:

• developing internal AI expertise,
• establishing robust model governance structures and
• investing in data quality and infrastructure.

II) Radically pursuing customer centricity

Customers expect more than just a product – they expect a solution. Banks must:

• completely digitalize their credit processes,
• develop personalized offers based on data analyses and
• establish new forms of communication that create trust.

III) Ensuring regulatory integration

Compliance must not be an obstacle – it must become an integral part of the strategy. This requires:

• integrating regulation early into innovation processes,
• establishing interdisciplinary teams from IT, legal, and risk management and
• proactively communicating with supervisory authorities.

IV) Anchoring ethics and responsibility

AI needs values. Banks must ensure that their systems

• act in a non-discriminatory,
• transparent and
• customer-oriented manner.

 This is not a technical challenge, but a cultural one.

How can banks actively shape the strategic challenges in the lending business?

The strategic challenges in the lending business up to 2030 are not fate – they are an invitation to take action. Those who limit themselves to the regulatory requirements will manage. Those who see it as a framework for innovation will shape it.

Or to put it with a touch of pathos: “By balancing algorithm and aspiration, banks must prove that they remain worthy of trust in the decade ahead.”