Employment Data: Measuring The Capacity of Loan Repayment

Employment Data: Measuring The Capacity of Loan RepaymentFintech lending has long been present in Indonesia, but the pandemic has boosted its adoption. More and more borrowers are flocking into fintech lending platforms to either finance their business or simply securing a consumptive loan. As of the end of 2021, there are more than 75 million accumulated borrowers account in various fintech lending institutions. While more borrowers can be a good sign for fintech lending growth, it can also be disastrous. With lack of proper credit underwriting processes, non-performing loan ratio may increase, causing fatal problem for the business. This has happened before. At the peak of the COVID-19 pandemic, fintech lending’s 90-day delinquency rate (TWP90) reached 8.88% in August 2020. While the number has recovered to a stable rate throughout 2021, it does not mean that fintech lending companies should start to loosen all borrower screening processes. Maintaining a rigorous screening process can be crucial to prepare for another blow. To ensure that non-performing loan remains low, lending institutions need to screen potential borrowers using additional information such as income and employment information. These data can be crucial to understanding borrower’s capacity to repay the loans when its due. That is why Brick is building an Income and Employment Data API. There are 30.66 million employees who are registered under Indonesia’s social security. Additionally, more than 19 million Indonesian filed their tax information in the 2020 financial year. Brick’s Income and Employment Data API consist of two end-points for monthly and yearly income and employment information. Client’s can either enable both options for end-users to connect or enable just one option. With either APIs, Brick’s clients can retrieve salary amount, as well as the employer name. The only difference being the salary information served in either a monthly or a yearly basis. How Companies can use Income and Employment Data? P2P lending and multifinance companies can use the data as additional variables to be analyzed in loan origination processes Buy Now Pay Later companies can use the data to assess and minimize risk by requiring users to connect these data to unlock additional credit limit How does it work: End users choose, authenticate and connect their account to client's app Client's app request data via Brick's API Brick's API response with the requested data Data is served to clients for further credit underwriting process ***