Big data analytics eyed for lending

Krungsri Consumer, the unsecured lending arm of Bank of Ayudhya (BAY), plans to discuss the use of big data analytics to scrutinise loan applications of self-employed workers with the Bank of Thailand.

If approved, the move is expected to reshape the evaluation process for potential borrowers’ creditworthiness, giving this customer group better access to unsecured loans.

With big data analytics technology, Krungsri Consumer can utilise consumer data from its group and business partners, particularly those engaged in retail business, such as Tesco Lotus, HomePro and Thai Watsadu, to analyse the spending behaviour of self-employed workers, said Thakorn Piyapan, head of Krungsri Consumer.

Such behaviour can shed light on self-employed customers’ loan demand, business trends and debt-servicing ability, he said.

At present, bank and non-banking entities regulated by the central bank use credit scoring, financial records and statements to approve loans, a process that prevents self-employed customers from accessing loans, as many of them do not have bank statements.

Mr Thakorn said Krungsri Consumer recently studied the unsecured loan business of Tesco Bank in Britain and found that it does not require a minimum income for borrowers applying for unsecured credit, but rather manages to control asset quality by using data analytics, both its own and that of business partners.

“We want to discuss with the central bank how consumer behaviour should play a role in loan analysis, apart from financial evidence, especially for self-employed borrowers,” he said. “With data and behaviour analysis, it will provide customers better access to credit.”

Self-employed borrowers without bank statements are, by and large, not qualified for unsecured loans under the Bank of Thailand’s requirements, Mr Thakorn said, adding that most of them have strong potential to honour their debts, so the company forecasts that the proposed loan analysis model can help control asset quality.

The central bank’s tighter regulations governing unsecured loans, in place since last September, have also affected the credit accessibility of self-employed customers, particularly those earning a minimum monthly income of 15,000 baht.

Under the tighter rules, the regulator has determined that new credit-card holders who earn 15,000 to just below 30,000 baht a month will have their credit line capped at 1.5 times their monthly income per card.

The cap is set at three times income for those who earn 30,000 to under 50,000 baht, and five times for those whose monthly salaries are 50,000 or higher.