Fintech Start-up of the Year, Philippines
Looking to improve the financial inclusion situation in the Philippines, FinScore entered the market three years ago with the fundamental idea that technology could act as the key bridge between financial institutions and the unbanked.
Specifically, the company examined the use of alternative sources of data such as telco data with an objective to create credit scores for financial institutions to use when making lending decisions.
“We are working with data that comes from your phone. We are also working with social media sources to create custom made social demographic scorecards,” explains Christo Georgiev, country manager and chief strategic officer at FinScore. In just a short period of time the company has been able to develop predictive credit scores for over 50 million telco subscribers in the Philippines.
Alternative data-based lending, as a concept, is something Georgiev believes could be a game changer in emerging markets such as the Philippines where lending information is limited. “Financial institutions don’t really have enough information in making a decision on a borrower who is new to the system,” says Georgiev. “The government is still in the process of providing a stable and fully functioning credit bureau in the country.” Alternative data-based lending has already been implemented in several markets including South Africa and Bulgaria.
Despite the track record in other markets Georgiev admits that educating and sharing the solution to the market has been challenging at times. “Generally, credit scoring in the country is something that is relatively new as a concept. Alternative data credit scoring is completely new. Typically, potential clients ask me if our propriety models work and the accuracy of them,” he recalls. Nevertheless, the company has been successful in also acquiring key clients including working with UnionBank and several others for future proof of concepts. According to FinScore, the company has already generated around 2 million credit scores.
Typically, what FinScore does is examine the payment habits of post-paid and pre-paid subscribers with a particular focus on pre-paid subscribers who comprise around 90% of the base they examine. “When it comes to pre-paid subscribers there are other predictive factors that we look at such as the amounts that are being topped up. It could also be how long they have been with the telco operator,” shares Georgiev.
Looking into the future, Georgiev ideally wants to continue the conversation around creditable alternative data sources. “From a tactical perspective we would like to increase our presence in the Philippines and establish ourselves as the number one data credit scoring provider, both for the financial industry and also for other industries such as insurance,” he says.