"Credit Evaluation and Loan Decisions Based on IPTV Viewing Time" - Yoon Hyung-ro, K-Bank CRO

K Bank Utilizes IPTV Viewing Patterns as Alternative Credit Evaluation Data
Call Volume and Data Usage Also Meaningful

"Is there a relationship between the time a person watches IPTV (Internet TV) at home and their creditworthiness? If so, how strong is it?"

It may sound like an odd question, but there are financial professionals who analyze people's behavior patterns in daily life to assess creditworthiness. Yoon Hyung-ro, Chief Risk Officer (CRO) at K-Bank, is one such person. His role is to help select thin filers (people with little to no financial history) or those with medium to low credit scores who are presumed to have the ability to repay loans, assisting them in obtaining credit. Above all, the key is to discover hidden data that can serve as a basis for estimating creditworthiness.

After spending more than half a year searching for useful data in KT’s data warehouse, Yoon found a clue in IPTV. He explained, "By analyzing whether IPTV is watched at night or during the day, whether it is viewed at consistent times, the average viewing duration, whether broadcast content is purchased, and the viewer's age group, we can estimate income status. For example, among people with the same credit score range, those who watch TV at consistent times and have shorter viewing durations are presumed to have income and repayment ability."

Call and data usage are also meaningful. Similar to IPTV usage, alternative information such as call volume and time of calls, and internet access times?data not typically used by traditional credit rating agencies?are used to infer creditworthiness. With K-Bank’s introduction of a credit scoring model (CSS) that utilizes such alternative information, there has been a rescue effect that raises credit scores for medium and low credit customers.

▲ Yoon Hyung-ro, Chief Risk Officer (CRO) of K-Bank

Yoon explained, "For example, a medium-credit office worker who has taken out bank loans and even card loans due to family circumstances has cash flow but finds it difficult to get additional loans, and if they do, the interest rate exceeds 10%. If we use alternative information to determine that although their current credit score is low, they have the ability to repay, K-Bank provides the loan. This person then repays loans from secondary financial institutions with that money, which improves their credit score. Consequently, they can have their K-Bank loan interest rate recalculated, reducing interest costs, creating a virtuous cycle."

In fact, since the new credit scoring model was introduced in February until last month, 6.5 out of 10 K-Bank loan customers saw their credit scores increase. The average increase was 36 points, with medium and low credit customers seeing an average rise of 41 points. K-Bank has identified that customers who borrowed from secondary financial institutions repaid about 50% of those loans after obtaining loans from K-Bank. Medium and low credit customers repaid nearly 70%, they reported.

K-Bank aims to introduce alternative information for credit evaluation in small business loans starting next year. It is difficult to accurately determine the actual income level of self-employed individuals using existing information from agencies like the National Tax Service. Yoon said, "We are developing a method to estimate small business owners' creditworthiness by analyzing sales data and review information of small businesses listed on online commerce platforms," adding, "Such alternative information will also help reduce interest burdens for small business owners."