Why it matters. It is a concrete example of how 'alternative credit scoring' — using everyday digital footprints instead of just loan history — can expand access to credit, a trend banks worldwide are testing.
Background. KakaoBank is a fully online bank spun out of Kakao, the company behind KakaoTalk, the messaging app used by nearly all South Koreans. When the government licensed internet-only banks, it required them to lend heavily to mid- and low-credit customers underserved by big incumbent banks, so these inclusion targets are a regulatory duty, not just marketing.
What to watch next. Watch whether regulators and rival internet banks like Toss Bank and KakaoBank's peers expand non-financial data scoring, and how default rates on these riskier loans hold up.
KakaoBank, South Korea’s largest internet-only bank, said on June 11 that it has supplied an additional 1.2 trillion won (about US$880 million) in loans to borrowers with mid-to-low credit scores by using an in-house credit model built on everyday spending data rather than traditional financial history alone.
The bank credits the lending to KakaoBank Platform Score (“Kaple Score”), an alternative credit-scoring model that weighs non-financial signals such as small payments, taxi rides, and shopping activity alongside conventional records like past defaults and repayment history.
How the Model Works
Launched in the second half of 2022, Kaple Score was, according to KakaoBank, the first model of its kind in the South Korean banking industry. It was developed by combining pseudonymized data from across the Kakao group with information from partners including Lotte Members (a retail loyalty and rewards operator), the bookstore chain Kyobo Book Centre, and the Korea Financial Telecommunications and Clearings Institute, the country’s interbank payment-settlement body.
By blending these real-world consumption patterns, the model aims to assess applicants whom standard, finance-only scoring systems would overlook. KakaoBank now applies Kaple Score in its routine loan reviews.
Reaching Borrowers the Old System Rejected
The impact shows up in the approval data. Since the model was put into use in 2023, roughly 12 percent of the mid-to-low-credit loans KakaoBank approved would have been turned down under a traditional, financial-information-based scoring model, the bank said.
These so-called “thin-file” customers — people with limited formal credit histories, such as younger borrowers, freelancers, or those who rarely use credit — are often penalized by conventional scoring even when their actual spending behavior suggests they are reliable.
Since its launch in July 2017, KakaoBank says it has extended more than 16 trillion won in cumulative loans to mid-to-low-credit borrowers. The bank framed the latest figures as part of a broader push toward financial inclusion.
“By using non-financial data to additionally screen mid-to-low-credit borrowers and extend loans, we are improving both the accuracy and the inclusiveness of credit assessment for the financially underserved,” the bank said.
Why Alternative Scoring Matters Here
South Korean regulators have pressed internet-only banks to serve borrowers shut out of mainstream credit, making mid-to-low-credit lending a core part of their licensing mandate rather than an optional side business. Alternative scoring is one of the main tools these digital lenders use to meet those obligations while managing risk.
