Credit risk assessment is a standard procedure for financial institutions (FIs) when estimating their credit risk exposure. It involves the gathering and processing quantitative and qualitative datasets to estimate whether an individual or entity will be able to make future required payments. To ensure effective processing of this data, FIs increasingly use machine learning methods. Large FIs often have more powerful models as they can access larger datasets. In this paper, we present a Federated Learning prototype that allows smaller FIs to compete by training in a cooperative fashion a machine learning model which combines key data derived from several smaller datasets. We test our prototype on an historical mortgage dataset and empirically demonstrate the benefits of Federated Learning for smaller FIs. We conclude that smaller FIs can expect a significant performance increase in their credit risk assessment models by using collaborative machine learning.

Information and Communication Technology (ICT) infrastructures are at the heart of emerging Smart Grid scenarios with high penetration of Distributed Energy Resources (DER). The scalability of such ICT infrastructures is a key factor for the large scale deployment of the aforementioned Smart Grid solutions, which could not be ensured by small-scale pilot demonstrations. This paper presents a novel methodology that has been developed in the scope of the H2020 project InteGrid, which enables the scalability analysis of ICT infrastructures for Smart Grids. It is based on the Smart Grid Architecture Model (SGAM) framework, which enables a standardized and replicable approach. This approach consists of two consecutive steps: a qualitative analysis that aims at identifying potential bottlenecks in an ICT infrastructure; and a quantitative analysis of the identified critical links under stress conditions by means of simulations with the aim of evaluating their operational limits. In this work the proposed methodology is applied to a cluster of solutions demonstrated in the InteGrid Slovenian pilot. This pilot consists of a Large Customer Commercial Virtual Power Plant (VPP) that provides flexibility in medium voltage for tertiary reserve and a Traffic Light System (TLS) to validate such flexibility offers. This approach creates an indirect Transmission System Operator (TSO)—Distribution System Operator (DSO) coordination scheme.

Federated learning (FL) is a machine learning technique that distributes model training to multiple clients while allowing clients to keep their data local. Although the technique allows one to break free from data silos keeping data local, to coordinate such distributed training, it requires an orchestrator, usually a central server. Consequently, organisational issues of governance might arise and hinder its adoption in both competitive and collaborative markets for data. In particular, the question of how to govern FL applications is recurring for practitioners. This research commentary addresses this important issue by inductively proposing a layered decision framework to derive organisational archetypes for FL’s governance. The inductive approach is based on an expert workshop and post-workshop interviews with specialists and practitioners, as well as the consideration of real-world applications. Our proposed framework assumes decision-making occurs within a black box that contains three formal layers: data market, infrastructure, and ownership. Our framework allows us to map organisational archetypes ex-ante. We identify two key archetypes: consortia for collaborative markets and in-house deployment for competitive settings. We conclude by providing managerial implications and proposing research directions that are especially relevant to interdisciplinary and cross-sectional disciplines, including organisational and administrative science, information systems research, and engineering.