BAKU, Azerbaijan, June 23. In today’s increasingly digital and deeply integrated financial landscape, the role of credit reporting systems has significantly expanded beyond traditional scoring models, said Togrul Aliyev, Deputy Governor of the Central Bank of Azerbaijan (CBA), Trend reports.
Speaking at the 1st International Credit Reporting Conference in Baku, Aliyev noted that credit bureaus now stand as a key pillar of the broader information infrastructure, including within the banking and financial system.
The official added that from a macroprudential perspective, credit bureaus play a vital role in reducing information asymmetries and default probabilities in credit markets, thereby supporting responsible lending.
"They are also crucial for macroprudential analysis, stress testing, countercyclical policy implementation, and the development of risk models under frameworks such as the International Financial Reporting Standards (IFRS) and Basel principles. This, in turn, contributes to overall financial stability.
Furthermore, it should be emphasized that credit bureaus serve as a key instrument in promoting financial inclusion. While in the past their role was primarily limited to improving access to finance by compiling credit histories for individuals and businesses and incorporating them into underwriting systems, today, more advanced integration methods have significantly broadened these opportunities," he said.
Aliyev emphasized that many credit bureaus are beginning to integrate non-traditional data sources into their systems.
"Examples include electronic payment operations, customers' e-commerce behavior, rental and utility payment data. These alternative sources provide new and broader opportunities for improving credit accessibility, not only for personal loans but also for micro, small, medium, and large business financing.
Within this context, I would also like to underscore the increasing significance of credit bureaus in facilitating remote financial services. The rapid acceleration of financial service digitization in recent years has heightened the importance of establishing business relationships and conducting financial transactions remotely. Naturally, this shift has introduced new challenges—particularly in verifying identities and mitigating the associated risks," he added.
Aliyev also underscored the importance of these developments for the digital accessibility of financial reporting by business entities.
"I believe that in this context, credit bureaus have the potential to play a critical role in developing the infrastructure for digital customer compliance measures and in strengthening the effective implementation of know-your-customer (KYC) principles. By integrating with existing identification and reporting databases within e-government systems, they can deliver real-time identity verification and authentication services, while simultaneously offering flexible analytical tools based on the financial reporting of business entities."
The Central Bank official also noted that artificial intelligence (AI)-driven models are designed to generate more accurate forecasts by processing large and complex datasets beyond the capabilities of traditional credit scoring systems:
"This enables a more granular segmentation of risks, faster credit decision-making, and the incorporation of non-traditional data into modeling processes. However, while these technologies offer significant opportunities for the financial sector, they also introduce new responsibilities for regulatory bodies. Although AI enhances efficiency and inclusiveness, concerns remain regarding model risk management and algorithmic transparency. In this regard, we, like other regulatory authorities, are particularly interested in the characteristics of the potential products to be discussed at this Conference," he said.
According to Aliyev, the role of credit bureaus continues to expand across technological, operational, and strategic dimensions.
"As integral participants in the broader financial technology ecosystem, we are confident that our collaborative efforts will enable us to address emerging challenges with confidence and fully realize the benefits these advancements offer. In this context, the evolution of the credit reporting system—initiated in the early 2000s with the establishment of the Credit Registry at the Central Bank—remains a notable achievement, particularly as one of the earliest examples in our region. Today, this progress is successfully carried forward by the Azerbaijan Credit Bureau. The bureau’s operations are recognized as key indicators in international evaluations, notably in the World Bank’s 'B-Ready' report, which assesses the business environment of countries. As widely acknowledged, our country has previously received high marks in this platform, especially under the 'depth of credit information' index.
As the Central Bank of Azerbaijan, we are committed to maintaining a systematic and consistent approach to further development in this area. I am confident that through our joint efforts with government institutions, stakeholders in the financial sector, the Azerbaijan Credit Bureau, and our international partners, we will foster the creation of a more modern, secure, and resilient financial environment," Aliyev concluded.
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