KakaoBank Supplies Additional 1 Trillion Won in Mid- and Low-Credit Loans Using Non-Financial Data Credit Assessment

KakaoBank Develops Its Own Unique Models
Including the "KakaoBank Score"

KakaoBank announced on June 29 that it has supplied an additional 1 trillion won in loans to mid- and low-credit borrowers using an alternative credit assessment model based solely on non-financial data. By utilizing non-financial data, the bank was able to provide loans to customers who had been rejected under models based on financial information.

Previously, KakaoBank became the first in the industry to develop a credit assessment model composed entirely of alternative information, called the "KakaoBank Score," by leveraging pseudonymized combined data from the Kakao community, Lotte Members, Kyobo Book Centre, Korea Financial Telecommunications and Clearings Institute, Danal, and others. Since the end of 2022, this model has been applied to credit loan screening, increasing the ability to differentiate among mid- and low-credit and "thin file" customers who were difficult to assess accurately using traditional, finance-focused models, and expanding the pool of potential loan recipients.

KakaoBank is also working to lower the lending barriers for small business owners by applying its alternative credit assessment model to business loans. The bank has developed a "small business sector-specialized credit assessment model" by combining various business site information as pseudonymized data, enabling effective evaluation of business owners in sectors with low financial accessibility, such as restaurant operators and online sellers.

Over approximately two and a half years since the introduction of the "KakaoBank Score," 15% (by number of cases) of mid- and low-credit loans issued were supplied to borrowers who would have been rejected under the traditional model but were newly selected through the alternative model utilizing distribution data, transfer data, and other alternative information. In terms of amount, about 1 trillion won in additional mid- and low-credit loans were approved.

A KakaoBank representative stated, "As KakaoBank's innovative efforts in alternative credit assessment continue to spread, we expect an environment where alternative credit assessment becomes more active, enabling more financial consumers to benefit and expanding inclusive finance."