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In Focus Risk

The use of gamification in credit scoring

There are many routes that lead to responsible lending, and gamification has a role to play

Frederic Nze CEO and founder, Oakam Frederic.Nze@

Within the credit-risk world, data is power; power to make better decisions for our users and our business, power to enhance our products and delight our customers. There is a lot of literature on the use of

big data and how it can enhance products and service. One associated concept we are particularly enthusiastic about however is gamification. Gamification is an excellent tool to

support responsible borrowing, giving users the option to share more information, allowing us to leverage big data and to deliver real benefits through a more tailored end product. We have been using the principles of

gamification for many years. We offer users small, not necessarily monetary, rewards through their interactions with us, encouraging them to continue their relationship with us, feel invested in that relationship and borrow responsibly. Gamification provides the opportunity

for users to share extra information that enables us to add colour to their data, evolving the conversation of credit worthiness beyond the ‘what’ to the ‘why’ of an individual’s credit score. We firmly believe that not all loan

decisions are black and white, and our users should not be reduced to the number that is their credit score. Historically, we have offered gamification

in the form of rewards for timely payments, a progressive scale of lower interest rates as

February 2016

We firmly believe that not all loan decisions are black and white, and our users should not be reduced to the number that is their credit score

we get to know our borrowers, and building community through refer-a-friend rewards to reach similar users who may benefit from our products. We have seen great success from this

approach. In 2015 we saw 42% of new loans originate through our refer-a-friend programme. Over 2014-2015 the percentage of our borrowers progressing through to our best loan rates – meaning that they must have a minimum of 12 months perfect repayment history with us – went from 19% to 25%. This deep knowledge and additional

data, which is volunteered to us through gamification, is proving such a good risk indicator that it is allowing us to consider a further rate progression toward near-prime lending rates, thereby meeting our goal of improving the financial lives of the under-banked.

We are now bringing this model to the

digital world, with the principles of gamification underpinning our entire lending platform. With our users living ever more digitally, and smartphones increasingly being our user’s connection to that world, it is important that we are accessible where they need us. The first step of this journey was the

launch of our smartphone app in August, which has seen more than 30% of customers download the app in the first three months. The combination of big data, gamification

and mobile delivery is enabling us to deliver on our mission: to create a better future for the financially excluded. CCR


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