Global information and insights company,TransUnion Kenya and and a global analytics software leader FICO have joined forces to introduce groundbreaking risk solutions aimed at expanding credit access and empowering financial institutions in Kenya.
These solutions leverage advanced data and analytics to enable lenders to make more informed decisions, fostering economic empowerment and a more resilient financial ecosystem.
Two key solutions are at the forefront of this transformation as unveiled at at JW Marriott in Nairobi, Kenya are TransUnion’s CreditVision® Variables and the FICO® Score.
CreditVision Variables provides a comprehensive view of consumer financial behavior, analyzing over 145 data sources and up to 24 months of historical payment data.
The new FICO Score, tailored for the Kenyan market, utilizes proprietary predictive analytics technology and is built on over 4 million records from the TransUnion database.
Integrating CreditVision Variables into credit risk strategies has demonstrated a 20%-30% improvement in risk predictability in other markets, resulting in a 15%-20% increase in approval rates. CreditVision Variables addresses key business needs by:
- Cost-effectively identifying and engaging new customers.
- Growing and optimizing the profitability of existing customers.
- Providing insights into customer motivations and behaviors.
“The effects of these innovations are expected to be profound. Consumers, Small, Micro and Medium-sized Enterprises (SMMEs) and other businesses can benefit from greater access to credit and financial services, enabling them to improve their financial health and achieve their goals. 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.
TransUnion and FICO have partnered across Africa since 1997, and this expansion into Kenya introduces FICO’s advanced scoring models designed for the local market.
The FICO Score represents the latest advancement in credit scoring for Kenya, reflecting the evolving lending landscape, particularly the prevalence of microlending.
This single credit risk score provides lenders with a more granular and effective means of credit risk assessment, boosting predictive power across all lending types.
Notably, the new Kenya-specific FICO Score demonstrates significant predictive power across all forms of lending, with microlending showing particularly strong performance.
This is significant in Kenya, where 95% of scoreable consumers have at least one microlending tradeline.
Benefits of the FICO Score include:
- A single credit score for traditional credit products and microlending, including mobile loans.
- Rapid approval/decline decisions.
- Refined credit limit and loan amount allocation.
- Consistent risk-based pricing and terms.
- Improved risk management.
- Greater efficiency across traditional and digital lending channels.
The FICO Score, ranging from 300 to 850 (higher scores indicate lower risk), provides a numerical snapshot of a consumer’s credit risk.
Each score includes the top four contributing factors, offering transparency and actionable insights.
The score is calculated on request using the latest information in the TransUnion file.
“This level of transparency aids both lending officers and consumers,” said Mike Manaton, Vice President of Scores at FICO. “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.”
The power of the FICO Score is illustrated by the risk distribution across the score range.
Consumers in the highest-risk decile (300-442) represent approximately nine times the risk of those in the lowest-risk decile (682-850).
TransUnion’s Q2 2024 Consumer Pulse Study indicates improving financial inclusion in Kenya, with 36% of consumers feeling they have sufficient credit access, compared to 33% a year ago. Sixty percent of consumers are considering applying for new or refinancing existing credit within the next 12 months.
“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,” said John Gachora, Chairman of the Kenya Bankers Association (KBA).
“TransUnion Kenya’s and FICO’s new credit risk solutions are a game-changer for the region. At CIS Kenya, we believe these innovative solutions will empower businesses to make more informed decisions and drive economic growth,” said Jared Getenga, Chief Executive Officer, Credit Information Sharing Association of Kenya (CIS Kenya).
