NH NongHyup Bank accelerates AI-powered alternative credit scoring

NH NongHyup Bank is stepping up efforts to refine its alternative credit scoring system using AI and non-financial data. The core aim is to more precisely assess the repayment capacity of "thin filers" — customers with limited financial transaction histories — in order to determine appropriate loan limits and interest rates for each borrower.

The bank said Thursday it is working through the NH Credit On Alliance — a consortium of eight specialist firms in finance, data and AI — to develop concrete ways to apply alternative information to actual credit assessments and risk management.

Launched in July, NH Credit On is a collaborative body designed to improve financial access for customers whose creditworthiness is difficult to gauge using conventional financial data alone. It focuses on supplementing the existing credit evaluation framework by drawing on a range of alternative information, including lifestyle finance data, alongside AI technology.

The alliance operates by rotating the chair of each council meeting among its member institutions. NH NongHyup Bank hosted the first session in July, sharing its own credit evaluation framework and operational direction. In August, Kakao Pay discussed the potential use of alternative data, including lifestyle finance information. Last month, Honest AI presented research findings on combining AI with alternative data for credit scoring and shared strategies for applying the approach to lending decisions.

At the fourth council meeting, scheduled for early this month, the bank plans to translate the alternative data discussed so far into concrete tasks that can be applied to actual credit assessments and loan reviews.

In November, the bank will hold the NH Credit On Alliance Performance Conference to share progress on alternative credit scoring initiatives since the consortium's launch. The event will also bring together financial regulators, related agencies and specialist institutions to discuss ways to expand the use of alternative credit scoring across NH Financial Group.

NH Financial Group, with NH NongHyup Bank at the center, intends to give customers who previously struggled to receive adequate evaluations under conventional financial data a new opportunity to be assessed — and to translate that into broader access to financial services.

"NH Credit On was established to more precisely evaluate customers who have had difficulty receiving fair assessments simply because they lack sufficient financial records, by leveraging diverse data and AI technology," a bank official said. "Through collaboration with eight specialist institutions, we will continue to upgrade our loan evaluation framework so that alternative information is integrated into actual credit scoring and risk management systems, and so that limits and interest rates suited to each customer's repayment capacity can be determined and connected to the financial services they need."

Meanwhile, the adoption of alternative credit scoring — which supplements the creditworthiness of customers with thin financial histories using non-financial data — is spreading across the financial sector. Savings banks and internet-only banks have led the way in applying such methods to actual loan reviews, and major commercial banks are also moving to broaden their use of the approach.