Psychometric scoring to advance SA credit industry
Compuscan, one of the largest independent credit bureaus in Africa, has established a strategic partnership with Coremetrix, a UK-based company powered by Creditinfo, the world’s leading creator of psychometric data for consumer risk assessment. The new initiative will enable Compuscan’s clients to assess consumers with limited credit information and those who are considered a marginal risk using a psychometric quiz that will complement traditional scoring techniques.
By incorporating image based tests, Compuscan and Coremetrix are able to add an additional layer of information about an applicant, taking into account their personality, motivations and likely behaviours. Combined with existing data, or in its stand-alone form, this innovative method provides credit providers, financial service providers, insurance companies and risk managers with an alternative indication of a person’s creditworthiness and suitability for financial products where little formal credit history is available.
Together, Compuscan and Coremetrix aim to impact the lives of nearly 20 million South Africans who find themselves largely excluded from the credit active population due to a lack of sufficient data upon which financial institutions can make credit-granting decisions. Additionally, Compuscan’s database currently lists 10 million consumers who are considered very high risk or high risk borrowers. The psychometric testing solution will provide financial institutions with an additional means of assessing these consumers, thus enabling them to potentially expand their client base.
Evidence shows that this unique approach can improve acceptance rates for credit products and, potentially, reduce default rates. This partnership will thus result in increased sustainable lending, lower delinquencies and fairer outcomes for consumers, which will ultimately benefit the economy.
Integrating seamlessly into the client’s existing application processes, consumers choose themselves if they wish to take the test. Coremetrix has already transformed risk prediction, developing innovative solutions based on the proven connection between personality and behaviour in credit and insurance. Coremetrix adds value in areas such as predicting the likelihood of claims against motor insurance policies, and provides significant opportunities to expand customer acquisition and account management whilst maintaining and even improving default rates in the credit sector.
Remo Lenisa, Founder and CEO of Compuscan, commented: “Compuscan is dedicated to continuously enhancing its ability to improve credit decision-making, which is why the implementation of psychometric scoring is a massive advancement for the South African credit industry. While Compuscan has long offered comprehensive data and outstanding analytics and scoring solutions, this innovative approach will no doubt complement Compuscan’s current offering to provide our clients with world-class decision-making tools and, in turn, will improve financial inclusion for entrepreneurs and individuals with limited or no credit history.”
Clare McCaffery, Managing Director of Coremetrix commented: “Our partnership with Compuscan will enable wider access to financial services across South Africa and pave the way for the underbanked to benefit from a range of credit and insurance services. South Africa provides us with the perfect opportunity to showcase the technology at its most impactful, where the traditional metrics for credit and risk assessment are not universal and the opportunity to provide valuable financial services to millions of customers is clear.”
Coremetrix was started in 2012 to change communication between people for the better. By combining the approaches of data scientists, psychologists, digital creatives and engineers, they have built and developed insightful personality quizzes and found new, innovative and pioneering ways to deploy, leverage and scale the resulting data so they can help to make a difference.
Coremetrix creates new data in the financial services realm and has established a link between a consumer’s personality and their credit intent.
Via Coremetrix’s brand of engaging, convenient and insightful personality quizzes, banks, institutions and lenders in several world markets now refer credit applicants to a new means of scoring that is scientifically sound, safe and, potentially, poses a lower risk than usual. In determining a candidate’s personality traits, and thus their suitability for credit, Coremetrix is converting declines based on limited information and marginal declines into accepts on the basis of who people are, not what they can prove.
Coremetrix is powered by Creditinfo
Data based on over 400,000 credit scores generated through Coremetrix technology in conjunction with lenders globally showed an increase in acceptance rates and a reduction in defaults. Addition of psychographic traits to scoring also improves the predictability when combined with bureau scores.