# Supervision Newsletter: AI use cases for credit scoring and fraud detection (Nov 2025): AI's impact on banking: use cases for credit scoring and fraud detection (Supervision Newsletter, November 2025)

Source: https://www.bankingnewsai.com/ai-regulation/documents/ecb-supervision-newsletter-ai-credit-scoring-fraud-2025
Last updated: Aug 26, 2026

The 20 November 2025 Supervision Newsletter reports the ECB's annual innovative-technology data collection (107 significant institutions in 2023, 110 in 2024) and 2025 workshops with 13 banks on AI for credit scoring and fraud detection. Decision-tree models dominate both use cases, neural networks are used mainly for fraud, none of the 13 banks allows self-learning after deployment, and about half have created dedicated AI policies or committees, some with a Chief AI Officer. Gaps found: little quantification of benefits, 'black box' opacity, inconsistent explainability definitions, weak application of data-management standards to AI, and operational-resilience shortfalls on cyber and third-party risk.

## At a glance

| Field | Value |
| --- | --- |
| Authority | [ECB](https://www.bankingnewsai.com/ai-regulation/ecb) |
| Type | Report |
| Status | Final |
| Published | Nov 20, 2025 |
| Applies to | Significant institutions using AI for credit scoring and fraud detection; findings inform JST engagement and the 2026–28 priorities. |
| Official text | https://www.bankingsupervision.europa.eu/press/supervisory-newsletters/newsletter/2025/html/ssm.nl251120_1.en.html |

## Key points

- Annual data collection: 107 SIs in 2023, 110 SIs in 2024, showing a strong rise in AI use cases including credit scoring and fraud detection
- 2025 workshops with 13 banks on governance and compliance of AI in credit scoring and fraud detection
- Decision-tree-based models are the main technique; neural networks used mainly for fraud detection; banks avoid gen-AI for credit scoring on cost, time and trustworthiness grounds
- None of the 13 banks permits self-learning after deployment; human oversight required for high-risk decisions and real-time fraud alerts
- About 50% of sampled banks have dedicated AI policies or oversight committees; Chief AI Officer roles emerging; high-risk self-assessments under the EU AI Act under way
- Models mostly built in-house but typically hosted on external cloud; explainability tools used for monitoring
- Gaps: limited financial quantification of benefits, black-box transparency, inconsistent explainability definitions, data-management standards rarely applied to AI, cyber and third-party weaknesses
- ECB to keep monitoring under the 2026–28 priorities with focus on strategies, governance and risk management

## What changed for banks

This is the first ECB publication with concrete supervisory findings on AI in core credit and fraud processes. It tells banks what 'good' currently looks like — no post-deployment self-learning, human sign-off on high-risk decisions, AI committees — and where JSTs will push: explainability definitions, data standards, and third-party/cyber controls around cloud-hosted models.

## Use cases it governs

- [Credit scoring & underwriting](https://www.bankingnewsai.com/ai-regulation/by-use-case#credit-underwriting)
- [Fraud detection](https://www.bankingnewsai.com/ai-regulation/by-use-case#fraud)
- [Model risk management](https://www.bankingnewsai.com/ai-regulation/by-use-case#model-risk)
- [AI governance (general)](https://www.bankingnewsai.com/ai-regulation/by-use-case#governance-general)
- [Third-party & vendor AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#third-party-vendors)

## FAQ

### What did the ECB find about AI in credit scoring at euro-area banks?

From 2025 workshops with 13 banks: decision-tree models dominate, no bank allows self-learning post-deployment, human oversight covers high-risk decisions, and gaps remain in explainability definitions, data-management standards and benefit quantification.

### How many ECB-supervised banks use AI?

The ECB's data collection covered 110 significant institutions in 2024; ECB speeches in 2026 put AI use at more than 85% of supervised banks.

## Related documents

- [ECB 'Dear CEO' letter on AI-enabled cybersecurity threats (SSM-2026-0301)](https://www.bankingnewsai.com/ai-regulation/documents/ecb-letter-ai-enabled-cybersecurity-threats-2026) — Addressing AI-enabled cybersecurity threats — letter from the Chair of the Supervisory Board to CEOs of significant institutions (Jul 7, 2026)
- [Elderson speech: 'Strengthening operational resilience for the age of AI' (June 2026)](https://www.bankingnewsai.com/ai-regulation/documents/ecb-elderson-operational-resilience-age-of-ai-speech-2026) — Strengthening operational resilience for the age of AI — speech by Frank Elderson (Jun 3, 2026)
- [Machado speech: 'Technology is neutral, governance is not' (Feb 2026)](https://www.bankingnewsai.com/ai-regulation/documents/ecb-machado-technology-neutral-governance-speech-2026) — Technology is neutral, governance is not: AI adoption in the banking sector — speech by Pedro Machado (Feb 24, 2026)
- [Montagner speech: 'Encouraging innovation, managing risks' (Feb 2026)](https://www.bankingnewsai.com/ai-regulation/documents/ecb-montagner-digital-transformation-speech-2026) — Encouraging innovation, managing risks: the ECB's approach to digital transformation — speech by Patrick Montagner (Feb 3, 2026)
- [SSM supervisory priorities 2026–28](https://www.bankingnewsai.com/ai-regulation/documents/ecb-ssm-supervisory-priorities-2026-28) — ECB Banking Supervision: SSM supervisory priorities for 2026–28 (Nov 18, 2025)
- [Machado speech: 'Artificial intelligence and supervision: innovation with caution' (Oct 2025)](https://www.bankingnewsai.com/ai-regulation/documents/ecb-machado-ai-and-supervision-speech-2025) — Artificial intelligence and supervision: innovation with caution — speech by Pedro Machado (Oct 14, 2025)
- [ECB Guide to internal models (July 2025, ML section)](https://www.bankingnewsai.com/ai-regulation/documents/ecb-guide-to-internal-models-2025-machine-learning) — Revised ECB Guide to internal models — expectations for machine-learning techniques in internal models (Jul 28, 2025)
- [ECB Guide on outsourcing cloud services](https://www.bankingnewsai.com/ai-regulation/documents/ecb-guide-outsourcing-cloud-services-2025) — ECB Guide on outsourcing cloud services to cloud service providers (Jul 16, 2025)

Last reviewed Aug 26, 2026. Cite the official text (https://www.bankingsupervision.europa.eu/press/supervisory-newsletters/newsletter/2025/html/ssm.nl251120_1.en.html) for the rule and this page for the summary and dates.

---

Canonical page: https://www.bankingnewsai.com/ai-regulation/documents/ecb-supervision-newsletter-ai-credit-scoring-fraud-2025
Part of [BankingNewsAI](https://www.bankingnewsai.com/) — a free daily brief on AI in banking, an AI regulation tracker (41 authorities, 237 documents) and AI-strategy profiles of the 120 largest US banks. Markdown versions of every reference page: append `.md` to the page URL; index at https://www.bankingnewsai.com/llms.txt.