model interpretability

This study presents a structured literature review on the application of AI in credit risk assessment, synthesizing empirical and conceptual research published between 2016 and 2022. It critically examines a range of AI models, including artificial neural networks (ANN), support vector machines (SVM), fuzzy logic systems, and hybrid architectures, with an emphasis on their predictive accuracy, robustness, and operational applicability. The review highlights that AI-based models consistently outperform traditional statistical techniques in handling nonlinear patterns, imbalanced datasets, and complex borrower profiles. Furthermore, AI enhances the inclusivity of credit evaluation by integrating alternative data sources and adapting to dynamic financial environments. However, the study also identifies ongoing challenges related to model interpretability, fairness, and regulatory compliance. By evaluating model performance metrics and methodological innovations across multiple contexts—including emerging markets, peer-to-peer platforms, and digital banking—the study offers a nuanced understanding of AI's strengths and limitations. The paper concludes with a call for balanced integration of explainable AI tools and ethical governance to ensure responsible deployment in financial institutions.

Background: Machine learning (ML) has developed significantly over the years, changing several industries through the use of automation and Big Data. By building better next-generation machine learning models, AI’s future has the potential of improving on existing problematic methods such as scalability, interpretability, and generalization. Objective: This article examines about how new generation of ML models are developed and used to explain about the capabilities of AI in different fields. In particular, it is focused on changes in structural models, certain methods of training them, and the application of brand-new technologies as quantum computing. Methods: A review of the state of the art and several case studies were carried out with regard to the latest work being done on different types of ML algorithms such as transformer models, reinforcement learning, and Neural Architecture Search. Moreover, the given models were tested in experiments concerning the applicability of these models in tasks including image recognition, natural language processing, and in autonomous systems. Results: The next-gen models, thereby outperformed the traditional models in terms of accuracy, computational speed, and flexibility. The identified benefits were decreased training time, better interpretability, and better performance with multi-modal and cross-domain tasks. Conclusion: These new generation of ML models are the game changers in AI development solving previous challenges while providing opportunities across numerous sectors. In this vein, further research in this field is needed to achieve AI’s solving of problems.