TransUnion Kenya has partnered with global analytics software provider FICO to introduce advanced credit risk solutions to expand financial access across Kenya.
The two new solutions are TransUnion’s CreditVision Variables solution and the FICO Score designed to improve risk assessment and financial inclusion.
CreditVision Variables provides an enhanced view of consumer financial behaviour, analysing over 145 data sources and up to 24 months of historical payment data. The new FICO Score on the other hand is built for the Kenyan market using proprietary predictive analytics technology and over 4 million records from the TransUnion database.
”Lenders will have access to better risk management and decision-making tools, leading to greater financial inclusion and economic empowerment, and driving more sustainable overall economic growth and stability,” said Morris Maina, CEO of TransUnion Kenya.
Enhancing traditional credit risk strategies with the FICO Score and comprehensive data analysis can improve risk predictability and enable lenders to extend financial services to more consumers. In other global markets, lenders integrating CreditVision Variables into their credit risk strategies have experienced a significant boost in risk predictability by 20%-30%. This enhancement has led to a notable improvement in approval rates, ranging from 15%-20%.
The FICO Score is a numerical snapshot of a consumer’s credit risk, providing a measure of their likelihood of fulfilling credit obligations. Using data from TransUnion, the model generates a score ranging from 300 to 850, where the higher scores indicate lower credit risk. Each credit score comes with the top four reasons for its calculation, offering transparency and actionable insights into factors impacting the score. The score is calculated on request by the lender and uses the latest information in the TransUnion file.
Mike Manaton, Vice President of Scores at FICO said this level of transparency aids both lending officers and consumers. “The FICO Score provides clear insights into the factors influencing a consumer’s score. Additionally, it enables lenders to assess applicants more accurately, tailor credit terms accordingly and enable credit access for more consumers.”
According to TransUnion’s Q2 2024 Consumer Pulse Study, financial inclusion in Kenya continues to improve. Its insights showed that 36% of consumers felt they had sufficient access to credit compared to 33% who felt the same a year ago. The increase in financial inclusion is noteworthy because well over half (60%) of consumers said they were considering applying for new or refinancing existing credit within the next 12 months.
John Gachora, Chairman of the Kenya Bankers Association (KBA) said “We welcome this global innovation in Kenya and are confident that the industry will adopt these solutions to drive the country’s Financial Inclusion agenda.”
”Financial inclusion remains a key focus for the industry, as it is essential for fostering economic growth and empowering communities. By embracing these new technologies, we can ensure broader access to financial services, in turn supporting sustainable development and prosperity for all,” Gachora added.
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