China Construction Bank (CCB) hopes to reach more millennial consumers and is using alternative scoring services to improve decision making and improve financial inclusion efforts to reach this demographic.
China's large unbanked market, numbering close to 500 million, represents a significant opportunity for banks, especially among youth, who have a growing demand for credit but lack on-bureau credit history that limits a bank’s ability to understand their credit risk.
CCB, one of China's "big four" banks, is hoping to unlock this market is by using alternative scoring services to improve the approval and automation rate of its credit card business.
“This project has enabled us to combine external big data, bureau scores with our internal data to enhance our predictive power when calculating the credit risk for the youth population,” said Mr. Erpeng Zhang, director of credit card center, China Construction Bank. “Partnering with the FICO team, we have significantly improved our origination efficiency while maintaining our risk profiles. Our new risk-based underwriting strategy is helping to us to maximize our overall profitability while expanding lending to millennials.”
Using the FICO big data scorecard, CCB has achieved a number of benefits. It has seen a significant lift in its credit card approval rates and the automation of these approvals. The bank has also increased its lending predictive power using eight segment-level scorecards. Plus, CCB has integrated FICO’s industry-leading big data score with its reservoir of application, bureau and internal data.
For its achievements, CCB won a 2018 FICO® Decisions Award for Financial Inclusion.