The Industry's First Alternative Information Utilization Model
Expanding Discriminatory Power of Thin Filer Repayment Ability... Potential for Customer Base Expansion
[Asia Economy Reporter Minwoo Lee] KakaoBank has developed a credit scoring model using alternative information rather than financial information for the first time in the industry.
On the 27th, KakaoBank announced that it developed its own alternative credit scoring model called 'KakaoBank Score' by utilizing pseudonymized combined data of 37 million cases from 11 institutions.
'KakaoBank Score' was created mainly using alternative information for low-to-mid credit and 'thin file' customers (people with insufficient financial history), for whom precise evaluation is difficult with financial information-based credit scoring models. Through this, it is expected to segment customers with insufficient financial history, who were concentrated in the middle range, and expand the pool of loan-eligible customers.
'KakaoBank Score' was developed using pseudonymized information from a total of 11 sources including Lotte Members, Kyobo Book Centre, NICE Information Service, Korea Credit Bureau (KCB), Kakao Mobility, Kakao Pay, Kakao Gift, Korea Financial Telecommunications & Clearings Institute, Danal, and LG Uplus. It is explained that various information such as KakaoBank internal data, online shopping, transportation, automatic transfers, book purchases, and distribution information were utilized.
KakaoBank believes that by combining 'KakaoBank Score' with credit scores from credit bureaus (CB companies), it can refine screening strategies and additionally select high-quality customers among those with insufficient financial history. In fact, when KakaoBank analyzed by age group using 'KakaoBank Score,' it was found that for those under 25 years old, who relatively lack financial history, the discriminative power was about 30% higher compared to CB company credit scores. Also, when analyzed by customer groups, the discriminative power for customers with insufficient financial history improved by 14.5 percentage points (p), from 46.5% to 61.1%.
A KakaoBank official stated, "Through KakaoBank Score, we will provide a reasonable evaluation system for customers with insufficient financial history and strengthen financial inclusion."
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