South Africans who have limited or no formal credit history can now use the TransUnion Telco Data Score, which is based on mobile phone call data records, to access financial services.
TransUnion Africa launched the new credit scoring solution on Tuesday 17 June in partnership with MTN and its digital platform business, Chenosis.
TransUnion Telco Data Score launchedThis alternative data scoring model leverages Call Data Records CDR, which reflect patterns in mobile phone network usage behaviour and correlates it to an individual's financial behaviour, TransUnion Africa said in a statement to newsrooms .
By using telco data as a proxy for financial reliability, the TransUnion Telco Data Score enables lenders to accurately assess New-to-Credit NTC consumers and expand access to safe, affordable credit.
Traditional scoring models have left over 16 million credit-invisible adults outside the formal credit system, according to TransUnion Africa.
Furthermore, 1.4 million South Africans open new credit accounts annually, with 35 of them aged under 25.
Successfully integrating these and other excluded consumers into the economy could add approximately R173 billion to South Africas GDP, the company estimated.
Accessing cellphone call data records raises consent issues. TransUnion Africa says its score is subject to explicit consumer consent and is managed in compliance with South Africa's Protection of Personal Information Act POPIA.
MTN is responsible for consent management and will ensure that Chenosis, MTN's API marketplace, facilitates the connection between MTN's data ecosystem and partners like TransUnion in a secure and scalable manner, it added.
The new score is also beneficial to lenders after it demonstrated a 25-35 improvement in predictive performance over previous alternative data models. This is based on pre-launch validations across the retail and banking sectors.