South Korea pilots AI credit scoring for small businesses

South Korean financial authorities are implementing a new AI-based credit scoring model, known as the Small Business Credit Bureau (SCB), to expand loan access for small business owners. Unlike traditional methods that rely heavily on past financial transaction history, the SCB evaluates future growth potential by analyzing non-financial data such as sales, business type, and commercial district competitiveness.

Eight banks, including IBK, Shinhan, KB, and Woori, began pilot operations on May 31. An additional eight banks, including KakaoBank and Toss Bank, are expected to join the pilot program later this year. The initiative aims to help ‘thin filers’—those with insufficient credit history—secure higher loan limits and lower interest rates.

The Financial Services Commission plans to expand the application of SCB to individual business owner loans in October and intends to incorporate it into regional credit guarantee products by 2027. To support the transition, the government has established guidelines to provide immunity from losses for banks in cases of non-intentional or non-gross negligence during the implementation process.