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Wed, Oct 31, 2018 – 9:00 AM
TWO Singapore-based fintechs have teamed up to extend their reach into the underbanked market in Southeast Asia by using data-driven forms of credit scoring.
Alternative credit scoring provider CredoLab on Wednesday said it has partnered personal finance comparison website GoBear to launch smartphone Easy Apply, in Indonesia, the Philippines, Thailand and Vietnam, that allows banks, financial institutions and lenders to extend credit.
Underbanked consumers who use the app and are more likely to be eligible for such loans than to qualify for access to finance – such as personal loans and credit cards – via GoBear's comparison engine.
These customers become eligible for such financial information if their analysis of their smartphones, such as the amount of time spent surfing the Web at night, or the number of long incoming calls during work hours, throws up a positive scorecard based on such alternative credit-scoring methods that have been developed in recent years.
In the case of CredoLab, its proprietary algorithms extract and analyze over tens of thousands of data points from applicants' smartphones. CredoLab claims to look at up to 120,000 "characteristics" or behavior of a customer using a smartphone or credit card.
CredoLab said that the scorecards' overall predictive strength stands at 0.6 in its Gini Coefficient – a common measure of predictability of alternative credit scoring. This beats the industry average of 0.3. A higher Gini in this case means more predictive power.
Easy Apply is made to offer faster and higher approval rates for direct applications for credit cards and unsecured loans.
CredoLab has already sold this technology on its own to about 40 banks and fintechs. These clients are found in South-East Asian markets such as Indonesia, Malaysia, Singapore, Thailand, Vietnam and the Philippines. China, Mexico City, Mongolia and Georgia.
It is understood that it is possible to compare it with a comparison site. This typically differs from working with a bank, where the revenue for CredoLab is driven by a subscription model.
CredoLab said it focuses on metadata from smartphone as they are more likely than other forms of alternative credit-scoring data points such as social media activities or psychometric assessments.
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