How data can drive new mobile banking for gig economy

THE launch of two Internet-only banks in South Korea in recent months offers some ways to think about how banks in Singapore can reach the underserved, despite operating in a developed financial market. Specifically, the gig economy here could mean some opportunities for banks to use new forms of data for credit assessment for gig workers.

The two Internet-only banks in South Korea - K-Bank and Kakao Bank - aim to use new forms of data to refine how they make certain unsecured consumer loans that typically carry a "medium-level" interest rate of about 5-15 per cent per annum. All in, these two mobile banks plan to offer about US$3 billion of such loans in the next 10 years, said reports.

The idea is to use consumption patterns of potential customers to customise an interest rate, especially when the patterns show a higher likelihood of repayment compared to what conventional credit assessments may suggest.