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International Experiences with Innovative Credit Scoring Lessons for Indonesia

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Trissia Wijaya

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Muhammad Nidhal

Approximately 51% of the adult population in Indonesia remains unbanked. They cannot fulfill formal requirements to prove their creditworthiness and are therefore not considered for services by conventional financial institutions. Addressing this barrier to their financial well- being, innovative credit scoring (ICS) has emerged as a solution for financial inclusion. Digital service providers have developed tools to gather alternative relevant data that enable them to service a much wider segment of society.

However, the promise of ICS to extend financial inclusivity to the underserved population is not without caveats. Key risks include data inaccuracy, a lack of data privacy, heightened exposure to cyber risks, and potential for increasing or entrenching discrimination. As with any emerging digital financial innovation, further clarity in regulation, technology use, and data protection is needed.

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