Alternative Scores

Application of machine learning algorithms to the analysis of financial traditional data and additional specific risk factors extracted from digital Alternative Data.

Dedicated to Credit & Risk Management, Asset Management, Family Offices


Application of machine learning algorithms to the analysis of financial traditional data and additional specific risk factors extracted from digital Alternative Data. In this way, the number of variables considered simultaneously increases significantly (over 1,000) and greater precision is demonstrated by backtesting. Some variables remain decisive, for example the geographical location of the company which, however, acquires a greater level of detail with a breakdown of the Italian territory according to the different zip codes.
With our proprietary NLP technologies we can also analyze and turn textual documents in data, such as the explanatory notes.

3 specific risk factors

We also measure 3 specific risk factors for which we use digital Alternative Data. The addition of these factors contributes to completing the estimate of the financing or investment risk in SMEs or micro-enterprises. The main reason lies in the fact that the digital data are dynamic and collected continuously, unlike the balance sheet data necessarily static as they refer to the relevant year and, moreover, compiled, published and deposited subsequently.

Additional risk factors can also be very useful to insurance companies and debt collection companies.



Digital ID Card of the company or industry to measure the degree of digital transformation and the digital presence of a company or sector on the basis of different variables: distribution through e-commerce, data governance, update frequency and technology of the digital properties, analysis of customer reviews, social profiles of the managers,…



Evaluates the demographic aspects of the city where the company is located (i.e. if the company is closed to a seismic or hydrogeological zone).



Through sentiment analysis, measures the impact of existing or emerging crises (bankruptcies, crime, …) on a specific company, industry or geographical area. For example, we have developed risk analyses on the economic impacts of Coronavirus by territory, district or industry.

Success story

A leader company in Business & Credit Information chose FinScience to improve its 18-months default risk assessment model for unlisted companies.

The previous analysis was based on a maximum of 16 variables extracted from traditional financial data. The scoring was attributed considering the regional membership of the companies.

Leveraging Artificial Intelligence, from the same traditional data FinScience has extracted 1,400 variables and added to them the digital risk factor. The scoring is attributed considering the municipality of origin or the ZIP code if the company headquarter is located in a big city.

Results from the backtesting analysis
After only three months of work, FinScience was able to improve the reliability of the model by 13%, going from 80% to 93%. Thanks to the new scoring model, on a subset of 135,000 companies FinScience identified:

706 additional Bad Companies (High Default Risk) not recognized as such by the previous model

17,338 additional Good Companies (Low Default Risk) which according to the previous model were not worthy of credit with consequent loss of revenues of the lenders

The added-value of Alternative Data

Find out more about our investment strategies to beat the market and get alpha