© 2018 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.

Lessons Learned using Alternative Data

A Path to Inclusion for Over 1 Billion

Sally Taylor-ShoffScores Vice President, FICO

© 2018 Fair Isaac Corporation. Confidential. 2© 2018 Fair Isaac Corporation. Confidential. 2

The Challenge:

Facilitate credit access for the more than 3 billion consumers globally that are

financially excluded.

© 2018 Fair Isaac Corporation. Confidential. 3

The Opportunity

• Source: http://www.worldbank.org/en/programs/globalfindex

• http://oecdobserver.org/news/fullstory.php/aid/3681/An_emerging_middle_class.html

• FICO CRO APAC Survey: http://www.fico.com/en/newsroom/fico-survey-77-percent-of-apac-banks-say-inability-to-rate-the-risk-of-unbanked-consumers-constrains-their-business-growth-06-21-2017

• Accenture & Care International

3 billion consumer are unscorable today.

billion more consumers will enter the middle class by 2030.3

“Banks could generate about $380 billion in annual revenues targeting unbanked consumers in emerging markets.”380

% of APAC banks have customer growth targets of 20% or more for 2017

41 39 % of respondents’ credit assessment process is still mostly manual

© 2018 Fair Isaac Corporation. Confidential. 4

FICO® Scores Global Coverage and Experience + Alternative Data Projects

As of 4/2/18

© 2018 Fair Isaac Corporation. Confidential. 5© 2018 Fair Isaac Corporation. Confidential. 5

Challenge: How do you navigate the proliferation of

alternative data options?

© 2018 Fair Isaac Corporation. Confidential. 6

New Paradigm of Alternative Data

Consumer Reporting

Agency

Monetized Consumer Data

Sources

Consumer Contributed

Data

© 2018 Fair Isaac Corporation. Confidential. 7

Hierarchy of Data in Credit Risk Prediction

Financial Account Data

Bill Payment Data

Non-financial Data

1 2 3

© 2018 Fair Isaac Corporation. Confidential. 8

FICO® Score for India

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Cum

. % B

ads

Cum. % Goods

Trade-Off Curve: Credit Card New Accounts 2013-15

FICO® Score India Other National CB Score Random

Score K-S

FICO® Score 28.34

Other National CB Score 18.59

© 2018 Fair Isaac Corporation. Confidential. 9

FICO’s Six Point Data Test

6 Point Test

Regulatory

Depth & Breadth

Additive Value

Accuracy

Predictiveness

Scope &Consistency

© 2018 Fair Isaac Corporation. Confidential. 10

FICO ® Score X Data for India Rank Orders Risk

10.92%

8.15%

5.51%

3.86%

1.53%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1-130 131-140 141-151 152-164 165-299

Bad

Rat

e

Score Range

Bad Rate by Score Quintile *

*Personal Loan Portfolio April – Sep 2016

© 2018 Fair Isaac Corporation. Confidential. 11© 2018 Fair Isaac Corporation. Confidential. 11

Challenge: How do you overcome data limitations?

© 2018 Fair Isaac Corporation. Confidential. 12

FICO® Score XD

Public Record and Property Data

Most inclusive of datasets studied with high coverage rates

Telco and Utility Data

Payment information has similar characteristics to traditional credit file data

© 2018 Fair Isaac Corporation. Confidential. 13

The Key Segments of the Unscorable Population Universe

25mNo traditional credit file on

record

New to credit14%

Derogatory information in file

59%

Voluntary inactive27%

28mSparse or inactive

credit files

© 2018 Fair Isaac Corporation. Confidential. 14© 2018 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.

A path for over 1 billion to financial empowerment

Thank youSally Taylor-Shoff