Credit scoring is a crucial phase that anyone seeking loans from providers, such as banks or multi-finance companies, must go through. Providers are usually advised to comply with the 5C principles -character, capacity, condition, capital and collateral- to assess potential customers.

Fintechs also perform credit scoring, albeit a bit different from a traditional one using the digital-based Innovative Credit Scoring (ICS) business model. This model not only assesses bank accounts but also alternative data sources. ICS is expected to improve the effectiveness of credit risk assessment, reducing the likelihood of non-performing loans, especially amid the COVID-19 pandemic. ICS services are also useful in reaching unbanked individuals. The Ministry of Finance says that 132 million people in Indonesia are still considered as unbanked as of April 2021 with a lack of access to financial services.

According to Statistics Indonesia (BPS), 70 percent of small-medium enterprises are in need of working loans, something that potentially can be provided through fintech.

Therefore, OJK continues to push for a credit scoring system regulation for fintech providers to be completed before year-end. It will complement the existing code of conduct produced by ICS provider association. These measures are part of the effort to meet the government’s major agenda to increase the financial inclusion index to 90 percent by 2024

As a local collateral-free P2P lender, AdaKami is committed to supports the development of ICS to improve the performance of P2P lenders and create an inclusive economy in Indonesia.

AdaKami credit level is based on user’s internal credit score, user type (new and existing customer), and register OS (operating system). For credit scoring, we use different models for new and existing customer’s score output. Models include internal and external credit data sources, including but not limit to internal track record, 3rd party data, user’s self-reported information, telecommunication history, Bureau, etc. For existing customer, we also use their repayment history data in Adakami, such as past overdue days, repayment in-advance days, etc.  

The collaboration between fintech companies, including ICS providers, with regional development banks and multi-finance companies, is a vital variable in achieving financial inclusion and much-sought economic equality.