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How Structural Shifts in Scale, Technology, and Customer Behavior Are Redefining Risk Leadership This week’s Experian Commercial Pulse report includes great insights on the banking industry, a sector that is not simply evolving, it's structurally transforming. The implications of banking transformation extend well beyond portfolio performance. Consolidation, digital acceleration, and aggressive investment in artificial intelligence are reshaping the competitive landscape and redefining risk management itself. Watch The Commercial Pulse Update While commercial credit performance remains relatively stable, the operating model of banking is changing quickly. The institutions that thrive in this environment will be those that modernize risk frameworks in parallel with ongoing structural change. This week's Pulse identified four major trends CRO's and risk teams should be watching closely. 1. Consolidation in the Banking Industry: Fewer Banks, Fewer Branches The number of FDIC-insured banks has declined to less than half of what it was in 2000. Decades of mergers and acquisitions, including several of the largest transactions occurring in just the past five years, have materially reshaped the competitive environment. At the same time, the physical footprint of banking has contracted. Total branch counts have fallen significantly from their 2008 peak, and branch availability continues to decline across many regions. For risk leaders, consolidation creates both opportunity and exposure. On one hand, scale can improve capital efficiency, risk diversification, and investment capacity in advanced analytics. Larger institutions may also benefit from deeper data pools and stronger enterprise risk infrastructures. On the other hand, concentration risk becomes more pronounced, geographically, sectorally, and operationally. As institutions grow through acquisition, integration risk, model harmonization challenges, and cultural alignment issues must be carefully managed. For CROs, consolidation is not just an industry headline, it is a structural variable influencing counterparty exposure, competitive pressure, and systemic interdependencies. 2. The Acceleration of Online Banking As physical branches decline, digital engagement has accelerated dramatically. In 2019, just over half of U.S. consumers used online banking. By 2025, that number rose to roughly 71%, and projections suggest it could approach 80% by 2029. Younger demographics in particular show a strong preference for online-only banking relationships, while older customers continue to rely more heavily on traditional channels. For small businesses, digital onboarding, online treasury management, mobile payments, and remote lending processes are no longer differentiators — they are expectations. For CROs, increased digital penetration changes the risk equation in several ways: Fraud vectors expand as digital interactions multiply. Identity verification and authentication controls become mission-critical. Real-time monitoring replaces periodic review. Data velocity increases, requiring scalable analytics infrastructure. Operational resilience also becomes more important. As customer engagement concentrates in digital channels, system uptime, cybersecurity, and third-party risk management move to the forefront of enterprise risk oversight. Digital adoption is not merely a distribution channel shift. It is a transformation in how risk manifests and must be measured. 3. Technology Trends: AI, Automation, and Real-Time Risk Intelligence Technology modernization has become central to competitive strategy across commercial banking. Artificial intelligence, machine learning, real-time fraud detection, and automated underwriting are moving from pilot programs into core production environments. Generative AI adoption in particular has accelerated rapidly, with nearly half of commercial banks now operating some form of GenAI solution in production. For a CRO, the opportunity is substantial. Advanced analytics can: Enhance early warning systems for credit deterioration. Improve fraud detection accuracy while reducing false positives. Refine borrower segmentation and pricing precision. Optimize collections prioritization and recovery strategies. Strengthen stress testing and scenario modeling capabilities. However, innovation introduces new forms of model risk. AI-driven decisioning must be explainable, auditable, and compliant with regulatory expectations. Governance frameworks must evolve to ensure transparency, fairness, and mitigating bias. Data lineage and model validation processes must remain rigorous even as deployment speeds increase. The challenge for risk leaders is achieving balance, leveraging technological advantage without compromising control discipline. 4. Investment in AI: Strategic Imperative, Not Experimentation AI investment in commercial banking is accelerating at a notable pace. Industry forecasts indicate that AI spending in the Americas banking sector could exceed $54 billion by 2028 — nearly tripling from 2024 levels. This level of capital allocation signals a fundamental shift: AI is no longer viewed as an incremental enhancement. It is considered foundational infrastructure. Executives report that AI initiatives are focused on: Cybersecurity enhancement Fraud detection and prevention Operational efficiency Customer engagement personalization Credit risk modeling improvement For CROs, this scale of investment demands disciplined oversight. Key considerations include: Are AI initiatives aligned with defined risk appetite statements? Is governance keeping pace with deployment velocity? Are internal teams sufficiently trained to interpret AI outputs? Is the institution prepared for heightened regulatory scrutiny around automated decisioning? The strategic sweet spot lies in controlled acceleration — modernizing the risk stack while reinforcing control frameworks. Final Perspective for CROs Commercial credit performance today remains relatively stable. Yet the true story in banking is not short-term performance, it is long-term transformation. We are operating in an environment defined by structural consolidation, digital-first customer behavior, rapid AI adoption, expanding data ecosystems, and increasing regulatory complexity. For Chief Risk Officers, the mandate is clear: safeguard portfolio quality while modernizing risk infrastructure. The institutions best positioned for sustainable growth will not simply extend capital efficiently, they will integrate advanced analytics, strengthen governance, and proactively manage emerging digital risks. Transformation is underway. The question is not whether it will continue. The question is whether risk organizations will lead it — or react to it. Learn more ✔ Visit our Commercial Insights Hub for in-depth reports and expert analysis. ✔ Subscribe to our YouTube channel for regular updates on small business trends. ✔ Connect with your Experian account team to explore how data-driven insights can help your business grow. Download the Commercial Pulse Report Visit Commercial Insights Hub Related Posts

The Experian Small Business Index™ rebounded by 8.5 points month-over-month, remains up by 12.8 points Year-Over-Year Jan 2026 Index Value (Jan): 54.3 Previous Month: 45.8 MoM: 8.5 YoY: 12.8 (Jan 2025 = 41.5) The Experian Small Business Index™ increased 8.5 points to 54.3 in January. This is 12.8 points higher than it was a year ago. The improvement coincided with declines in certain risk indicators, including utilization and overdue balances, alongside increased demand for and access to new credit. At the same time, some risk factors warrant continued monitoring, as later delinquencies on commercial trades and early-stage delinquencies on consumer trades ticked upward. Several macroeconomic indicators improved in January, including inflation and labor market measures. Inflation decreased from 2.7% in December to 2.4% in January, the lowest since May 2025. Core inflation was down from 2.6% to 2.5%, the lowest since March 2021. The U.S. economy added 130K jobs in January, and unemployment ticked down to 4.3% from 4.4%. Some indicators, however, pointed to ongoing economic pressure. The PCE price index increased slightly in December to 2.9% from 2.8%, remaining above the Federal Reserve’s 2% target. Personal savings also fell for the eighth consecutive month as households continue to face higher prices. Consumer interest in new business formation remained elevated, with 532K new business applications filed in January. Explore Experian Small Business Index Related Posts

For many Chief Risk Officers, credit portfolio management can feel like a constant exercise in damage control. A spike in delinquencies is reported in the monthly update. A sector suddenly underperforms. The board asks whether the risk appetite still holds, after the fact. This reactive posture isn’t the result of poor risk discipline. It’s the result of portfolio management approaches built for a slower, more predictable credit environment. Today’s commercial and small business portfolios move faster, fragment across industries, and respond quickly to macro and behavioral shifts. To stay ahead, CROs must evolve credit portfolio management from firefighting to forecasting. Why Traditional Credit Portfolio Management Keeps CROs in Reaction Mode Many portfolio management programs still rely on legacy practices: - Lagging indicators such as delinquency and charge-off trends- Static, periodic reporting rather than continuous insight- Limited segmentation that masks pockets of emerging risk- Manual analysis that slows decision-making The result is a cycle CROs know well: risk becomes visible only once it has already materialized. By then, options are fewer, and corrective actions are more disruptive to growth and customer relationships. In volatile economic conditions, especially within small business portfolios, this approach exposes institutions to unnecessary risk and earnings volatility. The CRO’s Mandate Has Changed Modern CROs are no longer measured solely on loss avoidance. They are expected to: - Enable profitable growth while maintaining discipline- Translate risk appetite into day-to-day decisions- Anticipate risk before it shows up in losses- Communicate forward-looking insights to executives and boards That requires a fundamentally different approach to credit portfolio management; one that emphasizes early signals, segmentation, and scenario analysis, not just historical performance. What “Forecasting” Looks Like in Credit Portfolio Management A forecasting-oriented portfolio management framework rests on four pillars: Risk Appetite That Is Operational, Not Theoretical Effective forecasting starts with a clearly defined risk appetite that is embedded into portfolio segmentation, exposure limits, score bands, and monitoring thresholds. CROs move beyond static policy statements to measurable guardrails that guide growth and risk-taking in real time. Granular, Dynamic Portfolio Segmentation Rather than viewing the portfolio as a single aggregate, CROs segment by:Industry and geographyBusiness size and lifecycle stageCredit score bands and blended risk profilesProduct, tenure, and exposure concentrationThis level of segmentation allows risk leaders to spot early deterioration in specific pockets, before it becomes a portfolio-wide issue. Early-Warning Signals and Ongoing Monitoring Forecasting depends on identifying changes in behavior, not just outcomes. Shifts in payment performance, utilization, score trends, or public records provide valuable signals that risk is evolving. When these signals are monitored continuously and tied to clear action thresholds, CROs gain time, the most valuable asset in risk management. Scenario Analysis and Forward-Looking Analytics True forecasting requires asking “what if?”• What happens if rates stay higher for longer?• What if a key sector experiences a sudden demand shock?• How would losses and capital needs change under stress?Forward-looking portfolio analytics allow CROs to test assumptions, model outcomes, and guide strategic decisions before conditions deteriorate. Turning Portfolio Data Into Predictive Insight One of the biggest challenges CROs face is not a lack of data, but a lack of integrated analytics that turn data into insight. Portfolio forecasting requires: Access to high-quality commercial and small business data The ability to blend internal performance data with external risk indicators Flexible analytics environments where teams can test, validate, and refine models Dashboards that surface trends and outliers without weeks of custom reporting This is where modern analytics platforms become essential. How Experian Supports Predictive Credit Portfolio Management Experian’s Ascend Commercial Suite™ is designed to help risk leaders move beyond static portfolio reviews toward continuous, insight-driven portfolio management. Ascend Commercial Suite is an integrated analytics platform that brings together data, modeling, benchmarking, and portfolio analysis in a single environment. Key capabilities that support forecasting-oriented portfolio management include: Portfolio Performance Monitoring and DashboardsAscend enables risk teams to create interactive dashboards that are directly connected to portfolio and market data. This allows CROs to: Monitor portfolio performance continuously Identify emerging areas of strength or concern Reduce reliance on manual, recurring reports Advanced Analytics and Model Development With access to Experian’s proprietary commercial and small business data, along with client-owned data, risk teams can: Develop and validate new credit and risk models Monitor existing models for performance and stability Meet regulatory expectations for ongoing model validation Blended and Small Business Risk Analysis For portfolios that rely on personal guarantees or serve small and micro businesses, Ascend supports blended analysis using both commercial and consumer credit data. This provides a more complete view of risk and supports more accurate segmentation and forecasting. Benchmarking and Peer Analysis Ascend’s benchmarking capabilities allow CROs to compare portfolio performance against peer populations and market segments, helping to contextualize risk trends and identify opportunities for adjustment before performance diverges materially. Together, these capabilities help CROs replace reactive portfolio reviews with proactive, data-driven risk steering. "Looking at how similar businesses performed across the broader market helped us move from reactive decisions to forward-looking ones, especially when evaluating new segments and understanding expected loss rates before expanding."Arun Narayan, Chief Product Officer From Firefighting to Confidence When credit portfolio management is built around forecasting rather than reaction, CROs gain: Earlier visibility into emerging risk Smoother, more deliberate policy adjustments Greater confidence in growth strategies Stronger, more credible communication with boards and regulators The goal isn’t to eliminate risk, that’s impossible. The goal is to see risk forming early enough to manage it on your terms. Talk with Experian’s commercial risk experts about strengthening your credit portfolio management strategy with forward-looking analytics and insights. Get In Touch Learn more about how Experian Ascend Commercial Suite can help you monitor, analyze, and forecast portfolio risk with confidence. Learn more Related Posts

The independent workforce is booming, but traditional financial services have struggled to keep pace. On a recent episode of Experian Business Chat, Michael Zevallos, co-founder of Giggle Finance, shared how his FinTech is bridging this critical gap for gig workers and micro-small businesses. Watch Our Interview The Problem: A Broken System for Independent Workers With over 10 years of experience in online lending and FinTech, Michael witnessed firsthand how the financial system failed anyone outside traditional W2 employment or large commercial businesses. During his time at OnDeck, starting in 2011, he witnessed numerous independent contractors and micro-small businesses being completely shut out of credit markets. "It wasn't just about meeting underwriting guidelines," Michael explains. "Smaller deals just didn't generate enough profitability. There were too many hands in the cookie jar—underwriters, salespeople, loan brokers, loan closers—all trying to interact with these deals." The traditional system relies on predictable W2 paychecks and consistent business histories spanning five-plus years. But gig workers operate differently. An Uber driver might work 10 hours one week, 20 the next, and zero the week after. This variability, while reflecting the freedom of independent work, made them invisible to traditional lenders. A Market Opportunity Hiding in Plain Sight What started as a niche problem became impossible to ignore. In 2020, the independent workforce became the fastest-growing segment of the economy. Suddenly, tens of millions of Uber drivers, barbers, content creators, online sellers, and freelancers needed financial services that simply didn't exist for them. That's when Michael and his co-founders launched Giggle Finance. Flipping the Script on Risk Assessment Traditional credit markets look backward, reviewing historical output, past credit scores, and established track records. But as Michael points out, "It captures your past, but it doesn't capture your present or more importantly, your future." Giggle Finance partnered with Experian to develop a more nuanced approach to risk: Experian's Clear Credit Risk and Clear Inquiry go beyond traditional credit files to identify different patterns of behavior and risk signals that matter for independent workers. This allows them to go beyond a traditional credit report, predict risk more accurately, and approve the right customers. NeuralID Technology analyzes how customers interact with the application itself, detecting fraud while building confidence in legitimate applicants. The Experian SMB Marketplace connects Giggle with customers who genuinely care about and value their credit, allowing them to approve more applications with greater confidence. The result? Giggle can assess risk and approve applications in under 10 minutes, requiring just 90 days of cash flow activity to get started. "Consider a freelance marketer who could previously handle two or three clients. With AI tools for content creation and analytics, they can now manage five or six times that workload."Michael Zevallos, Co-Founder The AI Revolution in Independent Work The conversation took an interesting turn when discussing how AI is reshaping the gig economy. While most people think about AI's impact on large enterprises, Michael sees it transforming independent contractors in profound ways. "Gig workers aren't just drivers or delivery couriers anymore," he notes. "They're becoming creators, consultants, designers—more tech-savvy and capable than ever before." Consider a freelance marketer who could previously handle two or three clients. With AI tools for content creation and analytics, they can now manage five or six times that workload. Many solopreneurs are evolving into full-fledged agencies, keeping headcount low while scaling to dozens of customers. From Emergency Funding to Growth Capital This AI-enabled transformation has fundamentally shifted why customers seek financing. Historically, small business owners came to Giggle because of emergencies—they needed to make payroll or cover an unexpected expense. Now, increasingly, they're seeking growth capital. The Uber driver who becomes a limousine company owner. The logo designer who can now produce dozens of designs using AI tools. These entrepreneurs need funding to hire people, invest in equipment, and market their expanding businesses. "That structural shift is very exciting for both the customers and for us at Giggle," Michael says. Building Long-Term Relationships Giggle isn't just there for a one-time transaction. Some customers have been funded over 20 times across four years, with Giggle supporting them through various business evolutions. Uber drivers have become truckers. Others have launched limousine companies. The relationship grows as the business grows. Looking ahead, Giggle plans to expand its offerings, including a potential line of credit product for more mature businesses. The goal is to remain flexible and responsive to changing business needs at every stage. The Path Forward: Collaboration Michael sees tremendous opportunity for banks and FinTechs to work together serving the gig economy. Banks bring trust, established brands, and balance sheets. FinTechs like Giggle bring product innovation, technology, and user experience. "If you put those strengths together, you can build a financial system that truly serves gig workers, independent contractors, and micro-small businesses," he explains. Giggle's technology can underwrite customers in seconds using real-time income data and AI, while bank partnerships could provide credit at scale. A Market That's Only Getting Bigger When Giggle launched in 2020, there were approximately 30 million independent workers in the United States. Today, that number has more than doubled to 70 million. By 2030, Experian and Giggle believe the independent contractor workforce will surpass the traditional W2 economy. "Everybody's a small business. Whether it's a college student with an Etsy store, a professional with a side consulting practice, or a full-time independent contractor, the entrepreneurial spirit is becoming the norm rather than the exception."Ekaterina Gaidouk, VP of Marketing Getting Started For entrepreneurs and small business owners interested in learning more, Giggle Finance operates entirely online at www.gigglefinance.com. The application process takes less than 10 minutes, and approved customers can have funds in their bank account the same day—no human intervention required. In an age where the nature of work is rapidly evolving, Giggle Finance represents a new approach to financial services: one that recognizes independent workers not as risky outliers, but as the future of the American economy. 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