Credit bureau Experian and MTN platform company application programming interface (API) marketplace Chenosis have partnered to leverage data to drive financial inclusion in South Africa.

The partnership will enable Experian to access consented data from MTN’s mobile customers to establish alternative risk metrics, with the incorporation of information on airtime and data purchase patterns can be used to help boost a consumer’s credit score or generate a new alternative credit score allowing more consumers to gain access to credit.

Chenosis will enable real-time access through the API to this alternative data, which the partners say is a game changer for the credit excluded consumer in South Africa.

This use case exemplifies the power of APIs to facilitate consented data between parties in a secure, authorised, authenticated manner with a clear governance framework to maintain data privacy, said Chenosis CEO Saad Syed.

While there are about 25-million credit active consumers in South Africa, more than 20% of the population remains unbanked and relies on cash for their transactions.

“Improving financial inclusion is a core focus for Experian. We are committed to increasing financial health and fair access to credit in all the markets that we operate in,” said Experian Africa CEO Ferdie Pieterse.

“From a credit bureau perspective, there are millions of ‘thin file’ consumers in South Africa – those with limited or no information on a traditional credit bureau – who find themselves excluded from mainstream finance. They often face more difficulty or high costs when applying for financial products or services.”

Experian notes that an “unscoreable” individual is not necessarily a high credit risk, but rather they are an unknown credit risk, with no traditional credit history to be used as a benchmark, despite paying rent on time and in full each month and buying airtime and data on a consistent, frequent basis and thus great candidates for traditional credit.

“We believe that lenders need to go beyond traditional scoring criteria and consider a multitude of non-traditional variables to support their risk assessment processes. Our aim through this partnership is to introduce prepaid data to potentially help build a financial footprint and positively impact the lives of many,” Pieterse highlighted, noting that leveraging new and more appropriate data sources is the key to bringing more people into the formal credit economy.

When additional sources of data, such as mobile airtime or data payments, are incorporated into the risk assessment, a much more comprehensive picture of the consumer at a hyperpersonalised individual level emerges.

This can help lenders enhance their risk decisions, refine their provision overlay models based on statistically proven behavioural variables and expand their target credit universe by using non-traditional data to assess risk and predict future performance of individuals that have no credit track record.

“We believe this is just the beginning of our partnership with Experian and hope to jointly build an API ecosystem which will solve problems and create opportunities for consumers and businesses by providing a platform to exchange data and services securely through APIs,” said Syed.

Combining traditional credit data with alternative data to access consumer creditworthiness plays a critical role in improving financial access for thin-file and credit invisible consumers, which will play an integral role in strengthening the economy.