Accelerating Financial Inclusion with Smartphone Metadata

January 6, 2020

CIMB Bank Phillipines expanded its consumer base by signing over 1 million Filipino customers in just 10 months, through its all-digital mobile banking platform. This helped the bank become market leader in the ASEAN region. In a country like Philippines, with 77% of the unbanked population this is a classic success story. How did the bank achieve this feat?

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CIMB Bank Phillipines expanded its consumer base by signing over 1 million Filipino customers in just 10 months, through its all-digital mobile banking platform. This helped the bank become market leader in the ASEAN region. In a country like Philippines, with 77% of the  unbanked population this is a classic success story. How did the bank achieve this feat? The bank leveraged anonymized metadata from customers’ mobile phones such as number of application installed, calendar invites and the percentage of unread emails, to underwrite customers for personal loans. This helped the bank enable a seamless underwriting process and extend credit to a broader market without impacting cost of risk.

Lesson to learn: With growing smartphone penetration and internet user base to  increase to 480 million by 2020, metadata holds the key to expand financial access- especially in South Asian nations where semi-urban and rural population lacks personal document and credit history. According to a The Asian Development Bank (ADB)  “Accelerating Financial Inclusion in Southeast Asia with Digital Finance”, only 18% of adults use a bank account to receive wages or pay utility bills and only 11% borrow from formal sources. A KPMG estimation indicates a 438 million unbanked population in ASEAN nations. At the same time limited financial infrastucture hampers banks  ability to offer unique products across a wide region.

AI-based scoring – the game changer in financial inclusion

AI based scoring capabilities that uses metadata helps instantly score applicants, including “thin-file” customers who lack sufficient or any traditional credit agency data. This helps customers apply for a credit loan even in the absence of fulfilling traditional banking requirements which entail burdensome documentation and high fees. This helps speed up loan approval and boost customer base.

Collaborating with FinTech provider that uses alternative data such as  smartphone metadata for credit scoring and underwriting helps garner insight into customers lending habits. For instance, CredoLab, a leading Fintech providers uses CredoApp’s bank-grade algorithm to analyse nearly 500,000 features from opt-in and permissioned smartphone metadata to find the most predictive behavioural patterns before converting them into credit scores, in a matter of seconds. This enable banks to assess risk level and the repayment behaviour and creditworthiness of their applicants with greater accuracy before granting them credit or loans.

Driving Better Credit Decisions to Boost Financial Access

The ASEAN Economic Community’s Vision for 2025 is focused on bridging the digital gap, increasing financial access and literacy, amongst its other goals. With the constant surge in consumer demand for digital services, financial companies must invest in building a robust infrastructure to support future customer demand. There’s a huge population of prospective customers on the cusp of being part of the new digital financial ecosystem as FinTechs present alternate data based credit scoring to banks and other financial institutions. Banks FinTechs like Credolab are leading the way in doing just that and helping reduce the schisms that still exist in financial inclusion.