The Covid-19 pandemic has become a real challenge for the banking sector: investment credit delivery reduction, ROE decrease, and bank valuations dropping throughout the world.
However, according to Deloitte’s research, the return on equity is going to return back to normal to 10.4% in 2025.
Additionally, the recovery in the financial sector is expected to result in loans and potential net interest margin growth. Therefore, the prospects for the next few years are quite favorable even though the pandemic isn't over.
In the banking sector, digital transformations have continued to gather momentum by developing top-notch software and revising new approaches. While there are many aspects of digitalization, the combination of legacy lending systems and rapid technological advancements have generated strong demand for alternative credit scoring.
In this article, you will discover how scoring solutions including AI and ML can be used to extract meaningful insights from non-traditional data sources such as social media sentiment, app usage, utility or phone bill payments, and public records to achieve precision in solvency evaluation.
Moreover, we’ll describe the key advantages of the credit scoring software solutions and explain how they will take your business to the next level.
What Is Traditional Credit Scoring, and Why It Can No Longer Perform as Effectively as in the Past?
Traditional credit scoring is a process associated with the creditworthiness evaluation that is conducted before concluding credit agreements. Once it's done, a loan applicant receives an individual credit score, which is presented as a 3-digit number.
The institutions use different ranges of scores, but the most popular is a 300-to-900 credit score scale. Generally, a credit score of high 600s and up to the mid-700s is considered good. Building and maintaining a good credit score is very significant as it can help customers get approved for lower interest rates and attractive terms.
Although the credit bureaus use different mathematical algorithms while calculating credit scores, there are the most important characteristics that are factored in when customers apply for credit:
The first thing prospective debtors need to pay attention to before the lodging of an application is the payment history as it defines how consistently payments are made on time.
The second most important factor that has an impact on credit scores is the level of outstanding debt a potential borrower owes. Experts recommend sticking to the 30% credit utilization rule, otherwise, it can actually hurt the credit score.
Representing both active and closed credit accounts, a long credit history helps the lender to gauge the customer as a borrower.
Maintaining a mix of revolving and installment credit indicates financial reliability to lenders.
With this traditional model, as we have seen, the procedure for credit score assessment involves quantitative and qualitative analysis. As a result, the possibility of unpleasant future events such as defaults and the risk of human intervention is eliminated.
Even though there are numerous benefits including objective measurement of credit risk and time-saving features, credit scoring results are not quite fair as the information, which is derived from credit bureaus, is insufficient to conduct a meaningful review; therefore, conventional methods of credit scoring can’t give an accurate picture of creditworthiness.
What Is Alternative Credit Scoring & Why Is It So Popular?
The methods used for credit scoring are evolving from traditional statistical techniques to innovative methods as the world is changing and a wide variety of new data sources are being created.
While lending institutions rely upon credit reports and scoring to decide whether an applicant can afford to repay debts, alternative credit scoring refers to the use of current and accurate data for creditworthiness assessment, such as a digital footprint, which is the online activity information about a particular person.
The use of alternative data sources and innovative algorithms in credit scoring may help enable greater access to the unbanked category and first-time debtors, thereby providing them with credit and an opportunity to start earning scores.
The alternative data that generate more accurate credit scores include the following sources:
The better the payment history with utility providers, the easier it will be for a borrower to prove their ability to repay loans.
Good rental payment reports can drastically beef up an applicant's reputation and credit score, and therefore access finance at better rates. And it is sometimes necessary for rent payments to be verified by the landlord.
Asset ownership and steady employment have a beneficial effect on creditworthiness.
POS and transaction data reports can demonstrate a consumer's spending behavior and the way they handle all aspects of finances.
Self-reporting personal checking and savings information to the lenders might open up more opportunities to reach the financial goals.
Analyzing mobile phone data including payments, subscriptions, income level, consumption and top-up pattern, social media information might bulk up the consumer’s credit score.
How Can AI and ML Enhance Credit Risk Assessment?
Being a technological innovator for the foreseeable future, AI along with machine learning are used to analyze large amounts of alternative credit datasets and identify patterns in the different types of data that will help assess a prospective borrower’s behavior and financial reliability.
Considering real-time factors of the potential loan applicant's creditworthiness and making precise profit predictions, AI models transform credit scoring by identifying borrowers with high potential and thus include them in the credit programs. As a result, integrating AI into the financial sector minimizes risk exposures and provides more individualized credit score assessments.
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One of the most effective unsupervised learning techniques applied in data analysis is clustering, which aims to obtain natural groups from the data. Based on the principle of maximizing the similarity between the elements of a group, clustering forms data groups. The algorithms find an appropriate cluster for the borrower and use the average default assessment of the cluster to estimate the borrower's financial reliability.
The machine learning credit scoring solution provides a good understanding of credit risk in lending to consumers as they allow for faster and cost-effective data processing and detect fraud traits due to the ability of algorithms to learn from fraud patterns and quickly identify them in financial operations.
With these functionalities, it is no surprise that lending institutions are actively augmenting their analytics tools with machine learning to process big data, produce better insights, improve risk management, and expand access to low-interest credit. The innovative credit scoring solution includes the following subphases of the machine learning algorithms:
Access raw data
Collect and group the input data
Extract characteristics and properties from raw data
Choose useful features
Ensure the machine learning algorithm absorbs training data set to make predictions or perform given tasks
Interpret results
Credit Scoring Software: Definition and Its Main Benefits
Credit scoring software is designed to optimize workflows between a creditor and customer including the accurate determination of the loan applicant's solvency and the possibility of defaults by processing both financial and non-financial data.
The technological scoring solutions extend opportunities for the import of critical information from both standard and alternative sources into the database to create an in-depth analysis and evaluate the solvency of the potential debtor.
Investing in a loan management system and credit scoring software brings a lot of benefits and advantages for both lenders and borrowers. Here are the 4 most important ones:
Holistic Approach
Using credit scoring software draws a holistic picture of each applicant by taking into account more current financial and social information than earlier data as it builds a better understanding of their intention of paying back the debt.
Fair Credit Decisions
Based only on the facts related to credit risk, the credit scoring software solutions made it possible for lenders to measure the creditworthiness of a loan applicant more objectively and eliminate the human factor that is common in manual underwriting.
Instant Credit Scores
With the credit scoring solution, lenders can also significantly save time as the program speeds up decision-making by allowing them to approve an application as well as distinguish higher-risk borrowers immediately. Loan applicants receive credit assessment quicker without any quality or precision compromises.
Increased Access to Credit
While traditional systems restrict borrowers with no credit history, alternative credit scoring software solutions open up an opportunity for such applicants by analyzing and giving a gauge of the overall financial health of applicants with no credit score.
Credit Scoring Software Implementation Process
Although the development of credit scoring software might be a bit challenging and requires a lot of resources and costs, a well-organized implementation plan will provide the efficiency of all processes and essential financial savings for your business. To make the implementation process go as smoothly as possible, consider the following steps:
Identify credit scoring outcomes the organization would like to achieve
Ensure you have sufficient data capabilities
Leverage AI tools and machine learning in credit reporting
Usually, the credit scoring software implementation consists of a certain number of phases. Let's see six important stages that are employed during this process:
Combining various internal data with external information to create a statistical credit scoring model.
Measuring the likelihood of default by assigning consumers to risk classes based on their individual inability to pay obligations on time.
Defining threshold values on the default probability scale, developing measures to be taken on risk-class customers, and establishing decision rules regarding the risk classes that may result in applications refusal, the conclusion of the contract, modifications of payment terms, and risk-adjusted interest rates.
Using backtesting, an important part of credit scoring software implementation, as it verifies the credit scoring really fulfills the desired targets on the basis of customer data. The credit scoring calibration gives useful improvement clues of the developed model.
Ensuring credit scoring system implemented as part of the risk management.
Documenting the debtor- and credit-related data as well as the payment activities to keep technical and statistical maintenance of the scoring model and conduct a receivables risk assessment.
To Sum It All Up
Even though coronavirus factors strongly into the banking climate and economic situation remains fragile, you should still keep abreast of technology trends, opportunities, and innovations as there is a great deal of global financial transformations including fusion of technologies, cloud-based ERP, and automation continue apace. Otherwise, you are giving your competitors an edge.
As we can see from above, credit scoring software development emerges as one of the main focuses of the banking industry in the near future. At Intellectsoft, we bring together professionals with a solid background to provide customized solutions for various organizations to make the client’s credit scoring software more powerful that will meet all the customers’ needs.
Get in touch with our experts to find out more about our financial software development, credit scoring services, and the possibilities of working together. Our team at Intellectsoft would be happy to offer a free consultation and discuss opportunities that will help you grow your business exponentially.
The hospitality industry depends a lot on keeping customers happy, but it’s getting harder to attract and keep them. The pandemic hit this industry hard, and now market competition is tougher than ever, with competitive offerings swaying customers. Hospitality businesses are willing to spend big to win customers back. The main questions for many are: how can we stay ahead of the competition, keep our customers, and increase revenue? Keep reading—we’ve got some answers.
Customers today have so many options that getting their attention is a real challenge. It’s not easy to make them choose your business over others. What worked 10 years ago doesn’t work the same way now. Back then, people often chose businesses based on reputation. But with new types of businesses (boutique hotels, craft cafes) popping up or big enterprises getting a new strategy, expectations have changed. The good news is these businesses have shown what works: great customer service. They focus on personalizing the experience, making things easy for customers, offering loyalty programs, and using smart technology.
In this article, we’ll explore these tech strategies and show you how they can help your business grow, and double the revenue. Keep reading to learn more!
The Importance of Customer Satisfaction in the Hospitality Industry
Customer satisfaction, which equals exceptional customer experience, is the backbone of the hospitality industry. It plays a central role in driving revenue and loyalty, as satisfied customers are more likely to return and recommend a hotel, restaurant, or other hospitality business to others. In fact, a study by the Harvard Business Review found that a 1% increase in customer satisfaction can lead to a 0.5% increase in revenue. Moreover, loyal customers are more likely to forgive mistakes and continue doing business with a company, even if they experience a negative encounter.
Let's quickly review the challenges the hospitality industry is facing right now so we can move on to the solutions and our case studies.
Challenges in Hospitality
As businesses navigate the changes in the hospitality industry, there are some key areas where a little improvement can go a long way. From improving customer service to embracing digital transformation and tackling labor shortages, we’ll take a closer look at today’s biggest challenges—and, more importantly, how technology can step in to help. Let’s get started!
Poor Customer Service
Even with strong and high-quality business offerings, poor customer service can drive potential customers and existing customers away. Common issues include:
Long wait times in customer service queues (it is worth remembering that our attention spans 8 seconds, and we live in a very busy world, so quick and efficient responses are more important than ever.)
Poorly trained customer service representatives
Lack of follow-up
Services not being done properly or quickly
Recall issues that require multiple service calls
These problems can frustrate customers. But, at Intellectsoft, we believe that the right approach, combined with technology, can address them effectively.
Digital Transformation Gaps
Approximately 50% of hotels are adopting new technologies, with 43% automating repetitive tasks and 39% upgrading existing systems. Source: workstaff.app
While many businesses are adopting digital solutions, some still struggle with outdated systems and fragmented data. Legacy companies often face chaos when trying to manage their data and create new systems or add features.
Some of the recent examples include clients coming to us to create AI solutions for their services while their data simply was not ready for the advanced tasks. We advise stepping back, communicating with a company objective, and working on keeping the data clean (centralized, structured, and segmented).
When we’re asked to create advanced systems using AI, we always emphasize the importance of organized data. To train AI and build such complicated systems that truly work, you need to start from the very beginning—collecting, storing, centralizing, and organizing it. We encourage our clients to align all departments to work internally on the data so we can create a unified digital system that delivers personalized experiences.
If you’re unsure where to start with your data, we can help. Collecting feedback at various touchpoints along the customer journey is crucial for gaining insights into customer satisfaction and loyalty. Book an IT consultation with us, and our experts will guide you in mapping out a path to get more from your data and build a system that works for your business and team.
Reskilling Staff
The pandemic hit hard in early 2020, especially for the hospitality and travel industries. Even five years later, many businesses are still feeling the impact. Recruiting and retaining skilled staff has become a major challenge post-pandemic.
Reskilling to address technology’s impact is of utmost importance, as about 40% of hotel General Managers place it among their top three workforce challenges.
We strongly believe that adopting the right technology can help. For example, creating an app to train your staff not only saves time but also ensures consistency in learning. AI assistants can also work alongside your team, helping with tasks like recruitment (providing industry insights, crafting emails) and staff training. Imagine having an app dedicated to making your team’s work easier and more efficient!
How Technology Tackles These Challenges and Supports a Customer-Centric Hospitality Culture
Automation, AI, and similar technologies may threaten many. However, the debate about replacing humans isn’t about that—it’s about cooperation and working hand in hand with technology to achieve the highest standards and establish brand-new “golden standards.” Technology is here to assist staff in listening to and collecting customer insights from data.
Let’s review some of our cases to see examples of how technology helps improve customer experience and supports customer service.
Examples of Intellectsoft projects
Property management systems (PMS)
We created a web platform and mobile app that makes managing daily tasks easier and offers extra services to improve residents’ experience. It gives a clear overview of daily activities and helps with managing units and users. Residents can easily book amenities, submit service requests, and report incidents. The platform also includes features for equipment management, key instructions, workflows, and custom permissions. This makes it easier for staff to stay on top of equipment and ensure residents have all the information they need. Plus, tools like announcements, quick votes, a forum, and a community calendar help build a connected and engaged community.
Guest Experience Management App
Our next app helped our client improve their guest experience by replacing printed marketing materials and the need for phone calls with a smart solution. Now, guests can easily order in-room dining, make reservations, and interact with staff— through a simple tablet in their room. The solution includes three parts: a custom in-room tablet with a variety of services, an admin panel for hotel staff and service providers, and a backend system that connects everything together. This approach makes things easier for guests and staff, improving both convenience and efficiency.
Existing Customers First: Building Loyalty with Personalized Touchpoints
Keeping existing customers is not just a strategy; it’s well-known that retaining existing customers is more cost-effective than acquiring new ones. In fact, research shows that it costs five times more to acquire a new customer than to retain an existing one. KPMG named customer retention as the number one revenue driver for the company.
Moreover, a 5% increase in customer retention can lead to a 25% to 95% increase in profits, showing the significant impact loyal customers can have on a business’s bottom line. Retention strategies, like personalized experiences and loyalty programs, can foster long-term relationships and generate recurring revenue, ultimately making them an invaluable part of any business model.
Personalization: How Technology Can Help?
Everyone loves to feel special—it’s part of being human. In hospitality, personalization has evolved from being a luxury to an essential standard. With the right technology to manage your data effectively, you can deliver those “wow” moments that guests won’t forget.
More than half of hotel chains are already using personalization features on their websites, booking platforms, and apps, and another 39% are planning to follow suit soon. They’re tailoring experiences to fit guest preferences perfectly.
Source: Deloitte
How does technology make it happen?
CRM Systems: They help you keep track of guest preferences, booking history, and special requests so you can offer services tailored just for them.
Loyalty Programs: Personalized rewards and offers show your guests that you value them, keeping them coming back for more.
AI Personalization: AI analyzes guest data to predict what they’ll love (from room upgrades to local recommendations) before they even ask.
IoT Gadgets: Smart room features like voice-activated assistants, or temperature controls adjust to your guests’ preferences, making their stay more comfortable.
With tech-powered personalization, you’re building loyalty and maximizing the lifetime value of every customer.
Our Case Study: Smart Hotel Management & Loyalty Program
For one of our clients, we created a smart room solution, complete with a custom IoT system. Guests can use a mobile app to control services, explore amenities, and find resort information-- with a special touch to their suite type. For the client’s entertainment business, we improved their legacy software by running a full IT and code check, fixing issues, and making the system better for customers.
Along with that, we developed a mobile app for the loyalty program, allowing businesses to effortlessly reward their customers and keep them engaged with exclusive benefits.
Our solutions not only helped the client with special experiences for guests; it also improved operations, cutting costs by eliminating inefficiencies. Here's what our experts shared:
"We transitioned away from ESB (Enterprise Service Bus) systems, which previously cost millions, and replaced them with more efficient, self-managed solutions. Similarly, we’ve implemented Device Farms that improved operations and saved resources."
Leveraging Software to Increase Upsell Opportunities
Here are some examples of tech tactics that will help your team sell more and introduce new offerings to existing customers, improve overall efficiency leaving your team grateful:
Dynamic Pricing Algorithms
For finance and marketing teams, manually calculating pricing by segment to introduce your clients can be incredibly challenging. AI-powered tools can strongly optimize these strategies by analyzing your database in detail.
Upselling via Apps
Boosting revenue in the hospitality business often comes down to personalized experiences. Imagine this: a guest books a room, and then your app suggests a spa package or a room upgrade at just the right moment. Later, it nudges them to book a dinner reservation or a guided tour designed to their preferences. With apps offering these personalized recommendations during and after bookings, you’re not just increasing your revenue per guest but also skyrocketing their experience. And you do it in a sustainable way, not by speculating, but by offering what your customers desire based on their previous experiences. It’s a win-win: seamless, helpful, and far from pushy.
Inventory and Resource Management Software
Making every resource count in your hospitality business is key. Inventory and resource management software allows you to effortlessly track everything from linens to room availability, ensuring nothing goes to waste. Having real-time insights to reduce overstock, avoid shortages, and optimize operations assists sustainably keep everything under control and know what you need to focus more. It helps maximize room occupancy by aligning bookings with available resources, ensuring every room and item is used effectively. This approach leads to smarter management, better guest experiences, and a noticeable boost to your bottom line.
Adopting these strategies not only optimizes your operations but also drives business growth. Ready to discover how technology can elevate your goals? We’re here to create a tailored solution for you.
Steps For Implementing a Customer Service Technology Solution
Improving customer service in hospitality doesn’t have to be a daunting task. With the right technology, you can smooth the path of your operations, speed up response times, and elevate the overall guest experience. Here’s where you can make it happen:
1. Understand Your Needs
Start by identifying the challenges your business is facing. Are you struggling to manage high volumes of inquiries, track customer feedback, or personalize the guest experience? Pinpointing your needs will guide you to the best solutions.
2. Pick the Right Tools
Choose technology that aligns with your goals. Look for solutions that are scalable, easy to use, and integrate effortlessly with your current systems. Options like CRM software, live chat tools, or a guest experience app can make a difference.
3. Equip Your Team
Technology is only as effective as the people using it. Train your staff to make the most of the new tools, so they can deliver exceptional service and resolve issues quickly. Confident, well-equipped staff creates happy, loyal customers.
4. Keep Improving
Once implemented, monitor how well the solution works. Are response times improving? Are customers more satisfied? Regular evaluations will help you fine-tune your approach and keep things running harmoniously.
Some Tech Ideas for Hospitality Businesses
CRM Software: Manage customer interactions and preferences.
Guest Experience Apps: Delight guests with personalized experiences right at their fingertips.
Amenity Management Systems: Simplify operations for everything from room service to facility bookings.
Live Chat Tools: Offer instant support and answers.
Social Media Management Tools: Keep customer interactions engaging and organized.
Integrating these strategies will not only improve your customer service but also deliver unforgettable customer satisfaction, loyalty, and, ultimately, your bottom line. Ready to take the next step? Book a consultation with our experts.
Conclusion
To wrap up everything we've discussed, customer satisfaction and experience are at the heart of hospitality. Retaining customers is more than just keeping them around—building strong, long-lasting relationships and consistently meeting their evolving needs. By understanding their pain points and offering personalized solutions, you can inspire loyalty and drive progress. With the right technology and continuous improvement, your business can stay ahead, let go of what no longer serves you, and keep growing.
At Intellectsoft, with over 17 years of experience in software development, our expert team is ready to help. We create everything from mobile apps to full-fledged portals and systems, leveraging the latest technologies like AI, Cloud, and Machine Learning. With deep experience in the hospitality industry, we’re here to craft personalized solutions that bring your business unforgettable customer experience and retain your valuable clients.
Ready to double your revenue and level up your customer retention strategy with personalized technology? Contact our experts, and we look forward to working hand in hand with you to build or revitalize the perfect app or system for you.
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dditionally, the recovery in the financial sector is expected to result in loans and potential net interest margin growth. Therefore, the prospects for the next few years are quite favorable even though the pandemic isn't over.
