Democratizing access to credit to drive financial inclusion in PH — UBX

Januszczak suggests use of alternative data, AI to assess credit worthiness

Open finance has the potential to revolutionize the financial industry by democratizing access to credit for the unserved and underserved segments in the Philippines, according to the president of UBX, the driver of digital transformation in the Philippines.

During his talk at the Digital Banker’s South East Asia Tour, UBX President and CEO John Januszczak emphasized that open finance can unlock credit by leveraging non-traditional data that focuses on measuring character and credibility instead of credit scores, which are traditionally driven from banking transactions.

“Credit is the killer app for open finance in the Philippines because this is the biggest problem that has to be solved,” he said, noting that credit score is not sufficient to provide more Filipinos access to credit.

Institutions, Januszczak suggested, can leverage AI to process alternative data for credit assessments, prioritizing the borrower’s credibility over traditional credit matrices.

AI, he emphasized, plays a crucial role in analyzing vast amounts of data and uncovering patterns related to trust and credibility, which are essential for making informed lending decisions.

UBX is currently using AI to assess credit worthiness of its customers, allowing lenders in its platform to extend business loans to organizations that do not have traditional credit scores.

For instance, UBX allowed Seneca Trucking to successfully access a working capital despite lacking conventional banking credentials through its online lending marketplace. This empowered Seneca Trucking to grow its business, which then rippled down to its employees and the community.

“We are creating an open finance platform where we collect massive amounts of data and we use artificial intelligence to uncover credibility and to digitally attempt to measure trust and credibility,” he said.

Citing data from the Securities and Exchange Commission (SEC), Januszczak said there is a staggering P12 trillion business credit gap in the Philippines.

Globally, between 4.5 billion and 5 billion people have limited to no access to financial services, including credit.

To effectively address these gaps, Januszczak believes that the financial industry has to adopt a new mindset, emphasizing the need for a fundamental change in the way the industry approaches and thinks about financial services.

This new mindset involves embracing technological innovations such as artificial intelligence and data analytics to assess creditworthiness more accurately, instead of relying solely on banking transactions.

Januszczak added that this new mindset prioritizes financial inclusion, ensuring that everyone, especially those traditionally underserved by banks, has access to financial services.

“Providing credit to people who really need it in the Philippines requires that we have that mindset shift,” he said.

According to Januszczak, the Philippines stands to benefit significantly from embracing open finance, highlighting the strides that UBX has made since 2019.

"What will it be like when we connect all 117 million Filipinos to the global economy without any barriers to access?” Januszczak asked.