The new joint venture (JV) will use the telcos’ communication data to help generate credit scores, particularly targeting those without lengthy financial records

Getting a loan can be an arduous process at the best of times, but for those without a significant financial history, like students, progress can be impossible. 

Now, South Korea’s three national mobile operators – SK Telecom, KT, and LG U+ – are joining forces to create a new credit assessment JV, aiming to leverage their combined mobile data as an alternative to traditional financial records when building credit profiles.

Credit scores will reportedly be created based largely upon customers’ payment data, such as their consistency in paying their subscription fees, as well as mobile usage and shopping history.

The JV will also feature Seoul Guarantee Insurance (SGI), which will help provide guarantees for financially vulnerable consumers, and Korea Credit Bureau (KCB), which will assist in the creation of the JV’s credit scoring model.

Each of the South Korean telcos will hold a 26% stake each in the new company, while SGI and KCB while both take 11% stakes.

Combined, the five companies are expected to invest roughly $19 million into the business. 

The deal to create the JV is awaiting regulatory approval. 

This concept of using mobile data to help construct financial identities is nothing new. In fact, interest in Financial Identity as a Service (FiDaaS) technology, using machine learning and AI to assess transactional data like mobile subscription payments, has been growing for years. 

The crossover between the world’s unbanked population and the world’s mobile users is considerable, making mobile data an ideal alternative for constructing these identifies and thereby helping people to better engage with banking institutions and the global economy. 

Two years ago, a study from Oxford Economics suggested that building financial identities for the world’s unbanked population – which was roughly 67% of the global adult population at the time – could generate $250 billion for global gross domestic product. 

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