Aboitiz Data Innovation (ADI), an artificial intelligence and data science service provider, found 10 percent to 20 percent of borrowers, including starting entrepreneurs, rejected by traditional banks are often capable of repaying loans based on ADI’s alternative credit scoring models.

ADI chief commercial officer Guy Sheppard said the company uses over 900 data points other than the clients’ credit histories to assess their financial capacities.

“Alternative scoring is very different, and it was actually built out of rejected customers because they didn’t have the right collateral or the right track record,” he said in a Zoom meeting with DAILY TRIBUNE.

Sheppard stressed many banks often rely more heavily on past transactions than the future income of new entrepreneurs, resulting in missed business loan opportunities.

“Think about digital resellers. This is an individual that is now trying to set up a business account for a revolving credit line to be able to buy goods before getting paid by customers,” he said.

“Those sorts of people transitioning I would assume would have personal accounts and don’t have that business background to be able to back it up,” Sheppard continued.

To determine the entrepreneurs’ potential incomes, he said ADI collects data on their possible customers and the quality of the internet plan the entrepreneurs consume.

Credit scoring via anonymity

“We can correlate items like high internet bandwidth, proximity to an embassy, central business district, or a major point of travel, infrastructure like a freeway, a train station, or a bus depot,” Sheppard said.

He shared that ADI also creates “anonymized” borrowers and profiles to determine the effectiveness of alternative credit scoring.

Sheppard is optimistic more Filipinos will become entrepreneurs and help expand the banking and technology industries.

“The Philippines I think is really an exciting market because you have this entrepreneurial spirit that feels like it’s part of Filipino DNA. It’s the market where everyone’s keen to try everything,” he said.

Sheppard added the government has laid out “a very clear digitization and transformation strategy” that encourages technology companies to experiment with financial-related and cybersecurity tools to boost capital for micro, small, and medium enterprises which account for 99 percent of all businesses in the country.

ADI is part of the Aboitiz Group, which owns the Union Bank of the Philippines and its digital bank Union Digital Bank. ADI also serves other financial and non-financial companies in Southeast Asia.