China Construction Bank hopes to reach more millennial consumers and is using alternative scoring services to improve decision making and improve financial inclusion efforts to reach this demographic.
China's large unbanked market, numbering close to 500 million, represents a significant opportunity for banks, especially among youth, who have a growing demand for credit but lack on-bureau credit history that limits a bank’s ability to understand their credit risk.
China Construction Bank (CCB), one of China's «big four» banks, is hoping to unlock this market is by using alternative scoring services to improve the approval and automation rate of its credit card business.
«Our new risk-based underwriting strategy is helping us to maximize our overall profitability while expanding lending to millennials,» said Erpeng Zhang, director of CCB's credit card center.
Bolstering Predictive Power
CCB has embarked on a digital transformation journey to grow its market among consumers aged 18 to 35 years old, and key to this is using Fico's big data scorecard to increase its lending predictive power, and integrating Fico data with its own application, bureau and internal data.
This has allowed the bank to improve its origination efficiency while maintaining its risk profiles. In a statement, Fico said these initiatives have been positive so far, and have helped «create a path to access credit for many young people who will be good customers with a good credit risk profile.»
