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© 2018 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.
Lessons Learned using Alternative Data
A Path to Inclusion for Over 1 Billion
Sally Taylor-ShoffScores Vice President, FICO
© 2018 Fair Isaac Corporation. Confidential. 2© 2018 Fair Isaac Corporation. Confidential. 2
The Challenge:
Facilitate credit access for the more than 3 billion consumers globally that are
financially excluded.
© 2018 Fair Isaac Corporation. Confidential. 3
The Opportunity
• Source: http://www.worldbank.org/en/programs/globalfindex
• http://oecdobserver.org/news/fullstory.php/aid/3681/An_emerging_middle_class.html
• FICO CRO APAC Survey: http://www.fico.com/en/newsroom/fico-survey-77-percent-of-apac-banks-say-inability-to-rate-the-risk-of-unbanked-consumers-constrains-their-business-growth-06-21-2017
• Accenture & Care International
3 billion consumer are unscorable today.
billion more consumers will enter the middle class by 2030.3
“Banks could generate about $380 billion in annual revenues targeting unbanked consumers in emerging markets.”380
% of APAC banks have customer growth targets of 20% or more for 2017
41 39 % of respondents’ credit assessment process is still mostly manual
© 2018 Fair Isaac Corporation. Confidential. 4
FICO® Scores Global Coverage and Experience + Alternative Data Projects
As of 4/2/18
© 2018 Fair Isaac Corporation. Confidential. 5© 2018 Fair Isaac Corporation. Confidential. 5
Challenge: How do you navigate the proliferation of
alternative data options?
© 2018 Fair Isaac Corporation. Confidential. 6
New Paradigm of Alternative Data
Consumer Reporting
Agency
Monetized Consumer Data
Sources
Consumer Contributed
Data
© 2018 Fair Isaac Corporation. Confidential. 7
Hierarchy of Data in Credit Risk Prediction
Financial Account Data
Bill Payment Data
Non-financial Data
1 2 3
© 2018 Fair Isaac Corporation. Confidential. 8
FICO® Score for India
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Cum
. % B
ads
Cum. % Goods
Trade-Off Curve: Credit Card New Accounts 2013-15
FICO® Score India Other National CB Score Random
Score K-S
FICO® Score 28.34
Other National CB Score 18.59
© 2018 Fair Isaac Corporation. Confidential. 9
FICO’s Six Point Data Test
6 Point Test
Regulatory
Depth & Breadth
Additive Value
Accuracy
Predictiveness
Scope &Consistency
© 2018 Fair Isaac Corporation. Confidential. 10
FICO ® Score X Data for India Rank Orders Risk
10.92%
8.15%
5.51%
3.86%
1.53%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
1-130 131-140 141-151 152-164 165-299
Bad
Rat
e
Score Range
Bad Rate by Score Quintile *
*Personal Loan Portfolio April – Sep 2016
© 2018 Fair Isaac Corporation. Confidential. 11© 2018 Fair Isaac Corporation. Confidential. 11
Challenge: How do you overcome data limitations?
© 2018 Fair Isaac Corporation. Confidential. 12
FICO® Score XD
Public Record and Property Data
Most inclusive of datasets studied with high coverage rates
Telco and Utility Data
Payment information has similar characteristics to traditional credit file data
© 2018 Fair Isaac Corporation. Confidential. 13
The Key Segments of the Unscorable Population Universe
25mNo traditional credit file on
record
New to credit14%
Derogatory information in file
59%
Voluntary inactive27%
28mSparse or inactive
credit files
© 2018 Fair Isaac Corporation. Confidential. 14© 2018 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.
A path for over 1 billion to financial empowerment
Thank youSally Taylor-Shoff