The Business Challenge
We understand that not all consumers have access to credit – due to geographic location, credit history or lack thereof, or a combination of factors. For this reason, we have designed Compuscore PSY, an additional method of scoring for ‘thin file’ and ‘marginal decline’ consumers who were previously unable to access credit. In addition to this, Compuscore PSY could be used for ‘thick file’ consumers who are not declines, should a credit provider wish to improve their offer or profile a customer. Additionally, credit providers can use Compuscore PSY to improve their offers or customers’ profiles for ‘thick file’ consumers who have not been declined access to credit.
Compuscan has developed an important addition to profiling, a ground-breaking product called Compuscore PSY, which can be used to distinguish between risk-seeking versus conservative consumer behaviour. This product was developed by analysing data and finding a statistically-relevant link between certain psychological profiles and credit behaviour. Compuscore PSY calculates a score range similar to that of our traditional bureau Compuscore, but it is based on the psychometric data gathered from an individual.
How does it work?
The Compuscore PSY score is calculated after a consumer completes a multiple choice quiz, the answers of which are a selection of images. The consumer’s choices are then analysed in terms of their main personality traits across the ‘Big 5’ psychological constructs of openness, conscientiousness, extraversion, agreeableness, and neuroticism.
The quiz was built from a pool of 218 unique questions designed for South Africa. Based on the results of the initial study, the quiz has been refined to 28 questions for South Africa.
The quiz is designed to ensure we have:
- the best mix of questions;
- the best predictive power;
and great user experience. We will serve the 28 questions in a random order for every quiz taken, to calculate the Compuscore PSY score. As each question has a range of possible answers, the permutations increase exponentially as the user gets further through the quiz, therefor it is highly unlikely that we will see the same answers coming through from different users.
Compuscan created models for South Africa based on results from the quiz from a study of over 10 000 consumers with accounts opened on the bureau, then hybridised them with Compuscore V3 to design the custom hybrid Compuscore PSY_H model for South Africa.
The South African study showed a 14% lift in the Gini coefficient (a statistical measure used to evaluate the predictive power of credit scoring tools) for the Compuscore PSY_H, and a 21% lift in the Gini coefficient for the Compuscore PSY_HU.
The Compuscore PSY Models
Four models were created for South Africa:
- Thin File Model (Compuscore PSY_T) Use this score for bureau thin files or those consumers that do not have credit histories.
- Thick File Model (Compuscore PSY) – if not using Compuscore.
- Hybrid model (Compuscore PSY_H) for use with Compuscore V3. Both models are aligned.
- Hybrid model (Compuscore PSY_HU) for use with Compuscore V3 Unsecured. Both models are aligned.
The scores were based on the Gini coefficient, which evaluates the predictive power of credit scoring tools. The Gini helps a lender understand how good their credit score is at predicting which individuals will pay and which of them will default on a loan.
- A consumer approaches a lender asking for credit.
- If necessary or desired (in the case of thick files where the lender requires more information), the lender can request a psychometric score from Compuscan.
- Compuscan sends a message with a link to the psychometric quiz to the consumer.
- The consumer answers the questions in the quiz.
- The results are sent to Coremetrix to have a psychometric score generated.
- The psychometric score is returned to Compuscan.
- Compuscan delivers the psychometric score to the lender.
- The lender is able to make an informed decision regarding the application.
How long does it take?
Our aim is to make this process as convenient as possible, for both the lender and the consumer. As such, the entire process, from application to result, can be carried out in as little as 4 – 7 minutes. Consumers will be sent a link immediately, and as soon as the quiz is completed, it gets evaluated. The score is either returned in real-time, or is presented via a banner in the online application.
Why do you need this solution?
|Key Features:||Key Benefits:|
|28 questions in an image-based quiz to assess a consumer’s credit risk||Assess a consumer’s credit risk immediately after analysing their response|
|Based on the fields of statistics, neuroscience, human interaction and engagement technology||Lenders are able to make an informed decision about approving credit to thin file or marginal decline customers|
|An extra layer of consumer behaviour assessment in the risk decisioning environment||Lenders are also able to request psychometric scores for thick file customers|
|Distinguishes between risk-seeking and conservative consumer behaviour||Helps consumers to gain access to previously declined credit|
|Data is psychometric, based on an individual’s personality and psychological choices||Offers marketers additional information to better segment customers and markets|
|Hybrid scoring models for risk bands calculated from Compuscore V3, the Compuscore V3 Unsecured, and the psychometric scores||Provides lenders with new and potentially profitable customers|
|Integration with existing Compuscan products||Best combination of questions in quiz, superior predictive power and excellent user experience|