The Future of Data-Driven Financial Inclusion

In Australia, millions of people find themselves in a chicken-or-egg-type dilemma when it comes to getting credit. Even though they have steady income, they still can’t access credit because of lack a formal credit history. Yet, most of these consumers carry a smartphone, are online and connected through social networks, leaving behind a digital footprint that can be analyzed to better understand who they are and their attitudes toward credit.

This is why we have teamed up with LenddoEFL, the leading technology platform powering data driven decisions for financial services, to help them create more of a credit story. Your Social Score will use, with your consent, your digital footprint to provide additional insights for borrowers and for lenders to more efficiently make a preliminary assessment. That is why we brought Social Score to Australia, to help provide you and lenders with additional insights. It is always up to you if you want to share your Social Score with financial service providers or not.

We wanted to find out a little more about non-traditional data and how it is helping millions of people around the world build their credit story. We were lucky to get fifteen minutes with the team at LenddoEFL and chat through how non-traditional data is helping people around the world and their insights on the future of data.

1. Why do you develop credit models using non traditional data?

Roughly 2 billion people and 200 million SMEs around the world lack access to financial services. Financial institutions would like to serve these people but cannot due to lack of credit history and collateral. Financial inclusion and economic growth are impeded.

LenddoEFL‘s purpose is to remove this impediment to financial inclusion and provide the underbanked with access to affordable, fast and convenient financial products.

We found that while many people lack credit history, many people have a digital footprint through social media, email, and their mobile phones. In fact, more people are digitally included than financially included. So we looked to use that digital data as a means to understand someone and evaluate creditworthiness. We found that you can understand creditworthiness and willingness to pay by analyzing data sources such as email, social media, mobile phone, telco, and behavioral data. And in the cases where someone doesn’t have a digital footprint we can look at their personality through an interactive psychometric assessment. This ability to assess anyone is truly disruptive as it opens up access to financial services globally.

2. How is non-traditional data helping financial inclusion around the world?

Lending has historically been driven by relationships with loan officers. Credit scoring was introduced to help lenders make more objective decisions using repayment data. But this only covered a small fraction of people. So lenders have begun exploring new sources of information beyond the credit bureau to inform their decisions.  And today, we are seeing more and more lenders verify identity and make credit decisions online, leveraging new sources of digital and behavioral data. The future of credit decisioning and finance is digital – we are seeing that end consumers want to access financial products conveniently, in the flow of their daily lives, and this means accessing them online and on their mobile devices.

Since our early days we have seen the development of an entire category of alternative data credit scoring companies who are using non-credit bureau data sources like social media,  psychometrics, telco and mobile phone data to inform lending decisions. That’s a huge shift in how credit scoring is approached and an acknowledgement that someone’s character, abilities and personality can predict risk.

We are making an impact. To date, LenddoEFL has provided credit scoring, verification and insights products to 50+ financial institutions, serving 6 million people and lending $2 billion USD. This means that $2 billion of credit has been deployed to people and small businesses who may not have gotten access to a loan otherwise, thanks to our platform. And we are just getting started.

3. Can you give any examples?

Of course! We love to highlight our clients. Here are a few examples.

Fuse Business Loans from Mynt in the Philippines began working with LenddoEFL to assess credit risk for its clients that were 80% unbanked.  The partnership has enabled Fuse Business Loans to better small business owners like Leobert, an underbanked pig farmer. Leobert tried to borrow from other banks but had trouble due to extensive collateral and other requirements. Thanks to the Fuse Business Loan, he grew his farm from 2 pigs to 46 pigs and 130 piglets. Business is now booming. Watch the videoto learn how Fuse is able to lend to unbanked businesses offering a credit product that is fast, affordable and convenient for borrowers like Leobert.

Te Creemos is a leading Mexican microfinance institution that works with LenddoEFL to boost productivity by 28% and double their individual loan portfolio all while maintaining risk levels and lowering prices for their customers. Watch the video to hear their story.

Orient Commercial Joint Stock Bank (OCB), a prominent commercial bank in Vietnam, recently announced it will use credit scoring from LenddoEFL to serve more self-employed and salaried Community Banking (COM-B) clients who lack traditional financial and credit information. They expect the partnership will help them approve more people without increasing our risk, shorten turnaround times and improve the onboarding experience for their clients. Read more here.

4. What is the future of data?

Data is accelerating. Ninety percent of the world’s data was created in the last 2 years. And IDC has estimated that global data generation will grow 30% annually from 16 zettabytes to 160 zettabytes in the next 10 years. Unstructured data is predicted by Deloitte to grow even faster at 62% annually.

We envision a world where people are in charge of their own data, and can choose to use it to get access to products and services that work for them. We are working towards a future where each of us controls when and how data, from cell phone data, to email data to behavioral data, is used. We want to see people putting their data to work to achieve their goals – whether that’s buying a car, taking out a loan, getting insurance or starting a small business.

5. Why have you partnered with Lodex in Australia?

We are thrilled to be working with Lodex to bring social scoring to Australia.  We admire Lodex for their forward thinking and putting their customers first. We have tremendous respect for their expertise and the impact they are making in the financial sector.

Lodex is pioneering a new way to access financial services by letting the borrower choose from a range of bids. By using opt-in social data, Lodex’s members are able to present themselves to the Lodex panel of lenders and brokers in a way that gives richer information about their credit worthiness.

If you have any questions about how we are working with LenddoEFL to drive greater financial inclusion then do not hesitate to call or email us