Consumer credit: Gamifying credit scores for the unbanked

1. Consumer credit: Gamifying credit scores for the unbanked

2. “A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.”

3. Consumer credit is simply the lending of money to people, typically in mass-market, structured forms. Think mortgages, car loans, personal loans, and credit cards. In theory, the process is a simple one: secure a large chunk of capital at a good rate; divide it into more-useful smaller parcels; then market those parcels at a rate that attracts ample borrowers; but the right kind of borrowers, you want enough of them repaying their debts to cover those that don’t, with a sufficient margin left to pay the operational costs and a little bonus for yourself.

4. In practice, it is a little trickier than that. Even if we leave the funding to the suits in treasury, we’re still left balancing loan size, loan price, and loan risk in a market full of competition. Is it easier if you have some collateral? Yes and no. High-quality collateral can limit your risk, but it can add to your cost and competition. That’s what this show is about, listening to how lending professionals around the world are making compromises and finding gaps.

5. I've worked in consumer credit for 20 years, but I think the first time that I heard of anybody trying to use a psychometric-based scorecard for making credit decisions was over a few beers with my friend Sam, who has a psychology degree and works in marketing. And I dismissed that because I figured these aren't my customers. In many ways, though, the fact that they weren’t my customers, as a traditional lender, was the problem. In this episode, I look at how ConfirmU - the fintech that I have recently joined as Chief Solution Architect - is using elements of psychometrics and gamification to build credit scores for the unbanked, without the need for credit histories, smartphones, or technical literacy.

6. You can learn more about ConfirmU at their website, or by reaching out directly to Yatir by emailing yatir@confirmu.com or by finding him on his LinkedIn Niharika is on LinkedIn, too, or you can click to learn more about her stand-alone psychometric business - Psych4u Matogen Applied Insights have their homepage here, or you can once again find Jacobus on LinkedIn. You can learn more about myself, Brendan le Grange, on my LinkedIn page, while you can find my action-adventure novels on Amazon, some versions even for free. If you have any feedback, questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.

7. What really drives me is a problem and the way to find a solution for it. So I'm not a psychologist, but I thought that we would get an understanding of the person through elements based on the Big Five model in psychology, and the intent would lead them to actions. That, really, was something burning inside of me. So, one thing led to the other and ConfirmU evolved from something which is good for the English language but is not scalable for 207 dialects in India and pivoted to a much bigger problem, which is financial inclusion.