What's Ahead in Business Credit Technology?

This article does not deal with credit in the banking sense, but instead refers to business credit, which usually involves one business giving credit to another business that seeks to purchase products or services from the former. Similar to banks, many businesses have credit departments that use specific technology for credit scoring, collections and assessing risks in issuing credit. What this article focuses on are the foreseeable advances and innovations in technology for the business credit sector.
The author starts off with the usual benefits that can be gained from applying technology – cost-savings, speed, efficiency and interoperability between systems and departments. Considering the publish date of the article (October 2006), all of these benefits appear today as both taken for granted and applicable to any business department, not just the credit one. However, in my opinion, the article provides one exceptional insight into the future workings of credit departments and perhaps the credit industry as a whole – the utilization of Web 2.0 capabilities in issuing credit.
There is no specific mention of Web 2.0 (probably because the name was not used very broadly in 2006), but two of the interviewed executives – Joshua Burnett of 9ci, Inc. and Michael Banasiak of Predictive Metrics, discuss the enormous potential for credit departments in online collaboration and data and information sharing between users in businesses – two of the main characteristics of Web 2.0. The article even goes as far as saying that social networking groups like MySpace and LinkedIn would eventually evolve within the credit industry (CreditBook.com or CreditBlogSpot.com anyone?).
It is interesting to try and estimate some of the benefits from such interconnected groups. Among the obvious benefits is that businesses will be able to share information on credit-worthy customers and at the same time warn each other of risky ones – a sort of eBay-rating-like system. Additionally, the consolidation of information among many small businesses will begin to rival that of major banks and institutions, thus empowering such credit networks to rely less on the expensive proprietary information of others and to protect themselves from the inaccuracies and anachronisms that are sometimes inherent in external data sources.
According to the article, the impact of these collaborative business networks would be felt most noticeably at the small business level. Nevertheless, given the current financial situation in the country, one could wonder whether the existence of enough shared data between banks and lenders could have mitigated the effects of the subprime crisis by providing more comprehensive risk assessment capabilities.
And on a final note, there is always the threat of having too much information in one place, even if it is accumulated by many sharing entities. Many people would probably dislike the idea of having their future car dealer know about that one time their credit card was rejected at the restaurant, just as businesses would dislike the idea of not being able to start off with a “clean slate” when they go to a new lender. But then again, all that is probably already stored in a database somewhere, just as this innocent little blog post will be.

Main Article: What's Ahead in Business Credit Technology
Author: Diana, Tom
Publication Title: Business Credit. New York: Oct 2006. Vol. 108, Iss. 9; pg. 32, 2 pgs
ISSN: 08970181
ProQuest document ID: 1150835061
Document URL: http://proquest.umi.com.proxyau.wrlc.org/pqdweb?did=1150835061&sid=1&Fmt=4&clientId=31806&RQT=309&VName=PQD
Database: ProQuest, Banking Information Source