CCR2 Technology
Technology can be the key to ‘difficult’ sections of society
Solving micro-credit for migrants: three points on the use of new technology and innovation to promote more inclusive lending
Julie Haugen Chief product and marketing officer, Oakam
Julie.Haugen@oakam.com
In the current era of mass migration and globalisation, tackling financial exclusion in lending requires the industry to pay closer attention to the challenges of serving migrant communities. While migrants and nationals might rely
upon the same financial-services providers, their current financial needs and future economic prospects, credit histories, and cultural attitudes towards borrowing, are often distinctly different. To build a truly inclusive industry, lenders
must acknowledge the diversity that exists within the underbanked population. For migrant communities, there are three vital nuances lenders must solve for.
Solving the case of the ‘missing’ identity with alternative data The digitisation of our financial services, advances in data analytics, and the growing affordability of smartphones is making it possible to bridge the credit-access gap facing migrants who lack credit history. The absence of a standardised, universal
system for credit scoring can mean that migrants are at a particular disadvantage in accessing credit in their new country of residence. In the UK alone, net migration stood at
230,000 in 2017, putting a significant number of consumers at risk of financial exclusion.
At Oakam, our own digital-first model
has enabled us to leverage alternative data sources, such as network associations, observation of online habits, and also psychometric testing within the underwriting process, to overcome this barrier facing ‘credit invisible’ migrants. In fact, a recent study of 15,000 first-time
customers has shown that, by using an alternative approach to credit scoring, 70% of the sample group successfully made on- time repayments, despite previously having had challenges in accessing credit. Lenders catering to migrants must be open
to exploring new and innovative methods of credit scoring in order to ensure that
In fact, a recent study of 15,000 first-time customers has shown that, by using an alternative approach to credit scoring, 70% of the sample group successfully made on-time repayments, despite previously having had challenges in accessing credit
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www.CCRMagazine.com
May 2018
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