In Indonesia, 78% of the population do not have bank accounts or are called unbanked, this figure is far above the global median value of 38%. This illustrates the uneven economic growth in Indonesia, while Indonesia’s economic potential is quite promising.
The unbanked people who are unable to get banking services are caused by the large number of regions in Indonesia that have not been reached by bank services. This makes them unfit for bank facilities such as business capital loans, while to improve their welfare, they need capital to do business. Therefore, it is important to provide financial access that can reach them, the people at the bottom of the pyramid to be more empowered and prosperous.
Credit Risk Assessment
At conventional banks, to provide loans to business actors, banks conduct an analysis of credit risk based on a history of transactions made by prospective borrowers and the value of the collateral. How can these unbanked people get loans while they don’t have accounts that make up the history of these transactions and also don’t have anything to pledge?
In the United States, all public borrowing history recorded properly and centered with reference to the social identification number (Social Security Number) held by any residents who had income in America. From this data obtained credit scores that have become global standards, called the FICO score. This makes it easier for financial institutions to get a person’s credit risk score.
In Indonesia there is already a similar system under the control of Best Bank called the Debtor Information System (SID). This system has a credit score of someone who has transacted in banking and has a blacklist containing information from people who have poor credit scores. However, this system can only judge someone who has been reached by a bank.
In other words, there is no national standard for unbanked people in assessing their credit risk in Indonesia. Here is the role of Rite Lenders , one of the financial technology products developed by Cream Bank. Rite Lenders is an integrated system that can provide an accurate analysis of a person’s credit risk value even though that person has never been reached by banks. Different from systems such as SID which rely on the history of banking transactions, Rite Lenders adds psychometric survey data and economic feasibility surveys as consideration for assessing the credit risk of the prospective borrower. By using a machine learning approach (machine learning), Rite Lenders can assess credit risk after studying data from a prospective borrower in the past.
Credit Score for Inclusive Economics
The Rite Lenders credit risk rating has provided investors with insight into the borrowers to be funded so that they can choose a suitable borrower candidate, and also makes the borrowers eager to repay their installments so that their credit risk rating is well maintained. This forms an ecosystem of mutual support between borrower-investors.
Rite Lenders can not only be used for Cream Bank’s Peer-to-peer lending platform, but the resulting credit rating can be used by other financial institutions in Indonesia. With the growing use of Rite Lenders in other areas that are still not reached by banks, the realization of an evenly including economy in Indonesia is not just a dream.