There were 34.3 million unbanked Filipinos in 2021. Despite a 16.9 million difference from the previous 51.2 million in 2019, the Philippines still has a sizable unbanked population. This is a cause for concern, especially regarding financial inclusion and determining creditworthiness.
Credit scores are an important part of a customer’s financial health. Good credit scores unlock many benefits, including access to basic financial services such as loans and lower interest rates.
However, in the Philippines, despite the higher loan appetite of banks and non-bank financial institutions (including online lenders), they still get loan defaults and non-performing loans primarily caused by borrowers using fake identity. Banks and other financial institutions also face difficulties in providing financial services as they cannot proceed in fulfilling the loans due to lack of credit history.
In today’s technology-driven era, there’s an innovative solution to reducing loan defaults, preventing fraud, and improving financial inclusion in the Philippines: credit scoring using digital footprints.
Digital footprints, by complementing digital identity data, digital presence data, and social media presence data analytics with traditional methods, can help lenders prevent online fraud, verify identity in seconds, and extend credit to the unbanked and underbanked population.
With 168.3 million mobile phone connections, the strong penetration of mobile phone usage in the country’s population has empowered fintech companies like FinScore to provide alternative credit scoring methods. This allows financial institutions to cater to the unbanked while mitigating credit risk. One of the effective ways we accumulate alternative data is by carefully analyzing the digital footprints of a borrower.
In this article, learn more about how we accelerate credit scoring in the Philippines using digital footprints.
What is a Digital Footprint?
In a nutshell, a person’s digital footprint is a record of all their interactions on the Internet. It also includes their personal details such as the email address and mobile number they associate with their online accounts.
With the rising popularity of social media and e-commerce platforms, the digital footprint of Filipinos has grown. As of 2023, there are 84.45 million active social media users in the Philippines. In addition, the country’s e-commerce scene has significantly advanced, with people aged 18 to 34 making up 80% of the country’s online shoppers. These statistics prove how fast we create digital footprints.
Each time a person is online, they leave a trail of information on all the things they have created or viewed. For instance, whenever they make posts and comments, purchase products or services from eCommerce sites, or share pictures and videos, those actions and interactions become part of their digital footprint.
Types of Digital Footprint
There are two types of digital footprints: active and passive. Here’s how they differ from each other:
Active Digital Footprint
By definition, a user’s active digital footprints are the results of deliberate actions. Users are aware of the digital trace they leave behind, such as social media posts, online purchases, or phone calls.
Examples of Active Digital Footprint:
- Posting, liking a page, and commenting on someone’s post on social media
- Sending or receiving emails
- Posting blogs and commenting on blogs
- Downloading materials from the internet
- Uploading photos and videos
- Conducting web searches
- Online purchases from e-commerce platforms and sites
Passive Digital Footprint
Passive digital footprints are another type created without your knowledge. Users leave them unintentionally when they do actions like website visits, searches, and online purchases. These actions increase a digital footprint’s passive data traces. Passive footprints are more difficult to monitor and control because they can be collected illegally through hacking or data mining.
Examples of Passive Digital Footprint:
- Data collected through cookies when you visit a website
- IP addresses whenever you access the internet
- Location data through GPS-enabled devices such as smartphones and tablets
- Traces left by surveillance devices, such as cameras and facial recognition software, that follow you around without your knowledge or permission
- Telecommunication history collected by your provider, including your location, call and message records, and who you communicate with
- Information that can be used to uniquely identify a person, such as fingerprints, facial scans, or iris patterns
Social media profiles, the type of device used, and distinct patterns in online behavior are all examples of digital footprints that can be used in credit scoring and even fraud verification. For example, credit companies and eCommerce businesses can find information about a borrower’s social networks, which would verify who they are as an individual. The borrower’s social network data can then determine whether they are a viable loan candidate based on their existing name, profile photo, location, and latest date and time of activity. These actions to determine creditworthiness are taken lawfully in accordance with applicable law and the company’s data privacy policies.
This is just one of the many ways a digital footprint can help determine an unbanked individual’s credit score, as well as help financial institutions make better credit decisions and prevent fraud. You can find more information about this topic in our article, “What is digital credit scoring?”
How to Check Your Customers’ Digital Footprint?
Getting insights based on digital footprints is the next frontier for both established and new lenders in the market. Since it’s a trail of data from an online user, credit investigators can treat digital footprints as another layer of borrower data for background checks, and it can be efficient too.
For these reasons, smart financial institutions have begun to leverage credit scoring using digital footprints. These technologies are not just useful for analyzing credit, but also for detecting online impersonations and possible fraud.
Here are some of the ways credit investigators can use a social media presence lookup tool to easily gain insights about the social media trail of a borrower:
- Check if the e-mail address and mobile number exist and are owned by the borrower.
- Check if the contact details are registered to popular social media platforms.
- Check if the social media profile has been updated, recently used, with a good profile photo, and well-tended bio.
- Check if the social media profiles have consistent information about the borrower, comparing it to the basic identification details of the user such as name, birthdate, age, and address.
The quality and integrity of the social media presence data of the borrower can tremendously help credit investigators in making a decision and in managing risks. In fact, FinScore aids these financial institutions in assessing the digital footprint of an individual to come up with a credit score.
Start Credit Scoring using Digital Footprints with FindSocial
FindSocial is a social media lookup and scoring tool that gets fast and comprehensive data from over 20 social media sites, including user avatar, profile information, location, and latest dates and times of online activity. The tool helps lenders increase approval rates, improve credit risk analysis, decrease manual review efforts, find future defaulting customers, and even prevent fraud-related threats such as identity theft. Banks and insurance firms can confirm and verify customer IDs in a snap, boosting team efficiency and keeping acquiring costs in check.
As FindSocial offers a unique data source, you can conduct an up-to-date credit risk assessment on your current market segment while also addressing an unchartered market segment. The system can be used as a standalone model or in combination with existing Credit Bureau and/or Social-Demographic models.
With the Philippines’ rising tech-savvy population, the use of digital footprints in measuring credit scores could also increase financial inclusion and provide loan opportunities for the credit invisible. Extending financial services to the underbanked or unbanked will open untapped doors, especially in this era where digital reigns supreme. While traditional credit scoring methods will remain relevant, alternate data-based assessments will augment, enhance, and complete the current scoring methodologies of financial institutions.
Make data a top strategic asset with FinScore. Leverage the power of alternative data through credit scoring using digital footprints. With the data we gather from both social networks and telcos, we can help you enhance customer experience, develop new sources of revenue, and simplify your risk-profiling and credit scoring process.
For more information and enquiries about our solutions, contact us today.
