PETALING JAYA: Alternative data can provide lenders with customer insights to help them offer better financial services to the unbanked and underserved segments.

       Experian Information Services Malaysia chief executive officer Dawn Lai said the mandate set by Bank Negara for the applicants of digital banking licences to serve the underserved segment could be a challenge for the lenders.

       “These are the group of people who have a lack of information in the formal banking system in which there is an information asymmetry, ” she said.

       She added that banks are relying on the data provided by the Central Credit Reference Information System (CCRIS) to assess one’s credit worthiness.

       However, Lai pointed out that the gap could be filled by making alternative data available.

       “It is part of our vision to look at apart from traditional sources, what are the alternative data that is available in the market apart from the banking credit and non-bank credit.

       “We are also looking at telco and e-commerce and have recently signed a memorandum of understanding with Pertama Digital Bhd to explore and develop alternative credit-scoring solutions, ” she added.

       She was speaking at a panel discussion titled “Digital Banking: Powering a Ca$hless Society” which was held recently.

       Lai added that alternative data points can do more than filling the information gap to serve the unbanked segment.

       “During the pandemic, with repayment assistance being extended by the government in terms of loan moratorium, banks are looking at alternative data points for their loan approval and underwriting process.

       “Banks, including digital banks, can harness the customers’ insights to deliver the right products and services, instead of the standard one-size-fits-all approach to target the customers, ” she said.

       She added that Experian has been using alternative data points in Indonesia, which has a huge unbanked segment.

       Within a year after rolling out alternative scoring in the neighbouring country, Experian has helped in giving 180 million people in Indonesia a credit profile for the first time, overcoming the pain points of lenders who previously did not have such insights.

       While the public might be concerned with data privacy when alternative scoring systems are used, Lai is confident that the situation will improve when there is an evident benefit.

       “In the United Kingdom, those with low credit scores could give consent to draw the additional transactional data via open banking, to boost up the individual score instantly.

       “Once the individual understands the reason and the purpose of giving consented data, they may see data privacy – when used in a certain area that benefits them – is definitely beneficial to the industry and the individual, ” she said.

       Experian believes in the power of digitalisation to deliver fair financial access to uplift the lives of Malaysians.

       This is done in partnership with Malaysian lenders on its technology innovations which deliver seamless end-to-end customer onboarding, data access, ID verification, underwriting, analytics and decisioning solutions.

       Find out how credit scores and credit risk assessment are evolving in this digital age with new data sources. Visit bit.ly/experianpowercurve for more info.

       Experian is a Megabyte Partner of the Digital Financing: Powering a Ca$hless Economy Live Virtual Conference that was held on June 22 and 23 in commemoration of the Star Media Group’s 50th Anniversary. Visit bit.ly/digifinplaylist to watch the sessions’ replay.