Technical and financial feasibility of a credit scoring model for savings and credit unions

Abstract

The current banking system does not meet the needs of financial services, particularly credit to the poorest sectors of society, the banking presence are mainly located in cities and regions with important economic activity, to attend to these excluded sectors have created naturallv without super- vision and support of the authorities, financial institutions such as credit unions, cooperatives, popular financial companies, among others, called savings banks and loan altogether. However, most of these institutions are not recognized or supervised by the CNBV, which translates into risk for users of services to financial institutions, highlighting the inefficiencies in their lending processes, and decisions to accept or reject a credit application is based on knowledge, experience and judgment of the loan officer. This paper presents a feasibility analysis in terms of cost-efficiency for savings and loan institutions and in terms of cost-benefit to the service provider assessment of loan applications. As will be shown in the development of a model work of this nature streamlines the lending process at minimal cost and is a worthwhile investment for the provider of credit scoring.