KakaoBank is expanding loan supply to mid and low credit borrowers with an alternative credit scoring model using non-financial data.

KakaoBank said on Wednesday it additionally supplied 1.2 trillion won in mid and low credit loans using an alternative credit scoring model composed only of non-financial data.

KakaoBank is widening the pool of eligible borrowers by reassessing mid and low credit applicants rejected under financial-information-based models using non-financial data.

It is also applying a separate model to loans for sole proprietors. KakaoBank has developed a "small business sector-specialised credit scoring model" that combines business site information as pseudonymised data to assess restaurant operators and online sellers, among others.

Since applying the alternative credit scoring model in 2023, about 12 percent of mid and low credit loans handled by KakaoBank were supplied to individuals and sole proprietors who would have been rejected under the existing model but were additionally selected through alternative information-based evaluation. In supply terms, that amounts to 1.2 trillion won.

As a result, the cumulative amount of mid and low credit loans supplied by KakaoBank since its launch in July 2017 has exceeded 16 trillion won.

It is also pushing to upgrade the model by expanding the range of alternative information providers and usage. Recently, it further subdivided the sector-specific specialised model applied to sole proprietor credit loans into 4 categories: 생활밀착서비스업, retail, restaurants and online sellers.

KakaoBank is also expanding external provision of the alternative credit scoring model. Since early this year, it has been providing scores calculated by the model to some savings banks and capital companies.

The "KakaoBank Platform Score" provided to external financial firms is a separately developed model based on the alternative credit scoring model KakaoBank uses in loan screening. It reflects consumption and daily life-based non-financial information such as small-value payments, taxi use and shopping.

KakaoBank expects more than 10 financial firms to adopt the alternative credit scoring model for loan screening within this year.

A KakaoBank official said, "Expanding the base of the alternative credit scoring model will be key to building a fair and sophisticated credit evaluation system for consumers who have been sidelined," adding, "We will spread credit scoring model innovation across the financial sector to expand inclusive finance."