Credit scoring using system log data in the internet bank

Abstract

This study is the first to examine whether the performance of credit rating, one of the most important data-based decision-making of banks, can be improved by using system log data that is extensively accumulated inside the bank for system operation. This study uses the log data recorded for the mobile app system of Kakaobank, a leading internet bank used by more than 14 million people in Korea. After generating candidate variables from Kakaobank's vast log data, we develop a credit scoring model by utilizing variables with high information values. Consequently, the discrimination power of the new model compared to the credit bureau grades was improved by 2.4% points based on the K-S statistics. Therefore, the results of this study imply that if a bank utilizes its log data that have already been extensively accumulated inside the bank, decision-making systems, including credit scoring, can be efficiently improved at a low cost.