TRANSUNION Philippines will use telco data to help financial institutions to assess customers that have no credit history.
“We have established that telco alternative data can be powerful in predicting who will default in the next 90 days, especially on the unbanked, new-to-credit segments who were previously invisible,” TransUnion Philippines Solutions Group Head Pamela Reyes said at an online briefing on Friday.
This data that will be analyzed to include consumers’ mobile behavior such as usage location and device data, she said.
“For postpaid consumers, typically these are also their balances, their payment pattern, their call data records, internet usage patterns,” Ms. Reyes said.
Looking at these data has also become relevant given the rise of the digital economy where Filipinos mostly use their mobile phones to purchase, she added.
Ms. Reyes said telco data are good indicators of creditworthiness among the unbanked and those that have not yet borrowed from formal institutions, allowing for better financial inclusion.
“When [formal] lenders are able to offer consumers with a limited or no formal credit history or a line of credit, it creates an opportunity to build lifetime loyalty. To do so, access to the best information and insights is critical,” Ms. Reyes said.
Pia L. Arellano, president and chief executive officer of TransUnion Philippines, said their previous scoring products have allowed a monthly average of 60,000 new-to-credit consumers to have access to loans from financial institutions.
“We are focused on providing financial institutions with solutions that will enable them to support even more Filipino consumers. Through access to rich insights, lenders can increase acquisition volumes and better protect against fraud, all within their own defined risk appetites,” Ms. Arellano said.
A study by the Bangko Sentral ng Pilipinas (BSP) in the fourth quarter of 2020 showed that five in 10 Filipinos obtain loans from informal lenders. BSP Governor Benjamin E. Diokno said this makes Filipinos more prone to falling for risky schemes.
Meanwhile, only 29% of Filipino adults had accounts with financial institutions in 2019, based on BSP data. This means about 51.2 million Filipinos remained unbanked.
The central bank hopes to bring 70% of Filipino adults into the banked population by 2023. — L.W.T. Noble