Product development and data partnerships lead Michele Tucci explains the advantages of alternative data in credit scoring and its wider use in the fintech industry.

With anonymised data, better credit decisions can be made without compromising consumer privacy

CredoLab CEO Peter Barcak spoke to Bank Innovation about the benefits of alternative credit scoring for both borrowers and lenders in developing and developed markets.

In an interview with Caixin Global, Michele Tucci, head of product decelopment and data partnerships discussed CredoLab's decision to foray into the Chinese market.

SINGAPORE, MAY 3, 2018– CredoLab,a fintech provider of highly predictive, mobile-based alternative credit scoring solutions for banks, consumer finance companies, and retailers, today announced it has closed a US$1 million investment from established global venture capital firm Walden International.

CredoLab's co-founder and CEO Peter Barcak discusses with The Edge Markets how CredoLab uses alternative data to create a scorecard for each individual borrower

Data analytics is good for our economy, consumers, and good for society. Today 4.5 billion people worldwide remain financially excluded because they have little or no credit history. In an interview with CredoLab’s chief data scientist, Dymtro Kurov shares how banks and consumer lenders can leverage data analytics for greater business and social impact.

On 20 February 2018, CredoLab signed a Memorandum of Understanding (MoU) with Peppermint Innovation Limited, an Australian Stock Exchange-listed company. The MoU was signed under which CredoLab and Peppermint will explore opportunities to provide real time credit scoring for unbanked and underbanked Filipino customers so they can access micro finance and micro insurance services.

Traditionally credit is extended to people based on a credit score. Banks, credit card companies and other financial institutions will assess creditworthiness based on repayment histories and other financial benchmarks held by credit bureaus as well as their own internal databases. Most people in the developed world went through a “credit building” phase in their lives, but 4.5 billion people around the world have little or no credit history.

Credit lending has historically favoured those in developed markets, in more affluent regions of the world, leaving consumers in less well-off emerging markets without any way of obtaining a credit loan. This is a vicious cycle because without a loan, those people cannot build a credit score, and therefore find it challenging to obtain a loan. The loop continues. I’m interested in breaking this cycle, using alternative data to empower financially ‘invisible’ consumers and disrupt traditional credit scoring methods.

Mobile phones have become ubiquitous across the globe. Not only that, but smartphones are in the hands of a large majority of users and leave an enormous digital footprint, with tens of thousands of data points that can be used to predict user behaviour. The sheer amount of Big Data is exactly why CredoLab’s statistical models are so impressively predictive and stable.

“…at your fingertips” is a phrase commonly used in everyday conversation. However, when considered in its literal sense, there are few real life examples where this phrase is actually applicable. Nowhere is this phrase more applicable than in meta-data credit risk management. I want to discuss how the data collected from customer’s mobile phones can help banks make better credit decisions and smarter loan evaluations. Should banks be moving away from traditional ways of credit checks and scoring systems? CredoLab’s instantaneous, easy to launch, use and expand solution will convince of the answer.

While progress has been made in expanding financial inclusion, there are still billions of people in the world who do not have access to basic banking services, including access to credit. Between 2011 and 2014, the number of people worldwide having an account grew by 700 million between 2011 and 2014, according to the World Bank. Today, 62% of the world’s adult population has an account, up from 51% in 2011.

CredoLab said that the newly-raised capital — twice the amount it originally intended to raise — will be used to ramp up its product offerings and expand its operations to serve the underbanked population.

CredoLab was recently featured in Fintech News SG.