March 7, 2013

Big Data ushers in new ways to determine creditworthiness

Posted by: in North America

In line with Predictive Personalization, one of our 10 Trends for 2013, a number of startups, along with some traditional banks, are taking a Big Data approach to consumer lending. As Slate recently reported, several companies are analyzing unstructured sources of data (such as that generated by social media) in combination with conventional information to offer more precise assessments of creditworthiness, often targeting consumers with no credit history or poor credit.

U.S.-based LendUp, which positions itself as “a better alternative to payday loans,” offers short-term, high-interest loans based on data it verifies through sources such as Facebook and Twitter to improve an applicant’s credit profile. ZestFinance says it “takes an entirely different approach to underwriting using machine learning and large-scale big data analysis,” focusing on people with bad credit. Lenddo, which emphasizes “financial empowerment,” extends credit in the Philippines and Colombia—where traditional credit bureaus don’t exist—by using applicants’ social media contacts as references. And Kreditech, a German startup, touts a technology that analyzes more than 8,000 data points derived from e-commerce behavior, location, mobile device data and social media info, among other things.

Meanwhile, traditional banks are pursuing their own big data strategies to further refine their lending practices. In the U.S., JP Morgan Chase, Bank of America, Citigroup and Wells Fargo are among those moving beyond traditional gauges of creditworthiness, considering everything from how often consumers eat out to whether they shop mostly at upscale department stores or discount emporiums. Data sources include credit and debit card receipts, as well as social media profiles. Regulators are questioning the practice of using personal data without an individual’s knowledge to make life-affecting financial decisions. But the biggest threat for lending may be the “creep factor”—that is, when loan applicants become so creeped out by how much data lenders can gather that they decide not to apply in the first place.

2 Responses to "Big Data ushers in new ways to determine creditworthiness"

1 | Jonathan

March 10th, 2013 at 12:55 pm

Avatar

and where is the privacy and intimacy?

2 | Will Palley

April 25th, 2013 at 12:29 pm

Avatar

Cignifi uses data drawn from mobile behavior to gauge creditworthiness. http://bit.ly/11FsIqv

Comment Form

SIGN UP FOR OUR WEEKLY EMAIL NEWSLETTER:

10 Years of 10 Trends

The Future 100

Things to Watch

  • Bistro In Vitro
    May 26, 2015 | 3:59 pm

    In Vitro Ice Cream

    A new virtual restaurant is serving up “food for thought,” using design to explore a range of possible futures for human interaction with meat. The project, dubbed Bistro In Vitro, takes the far-out idea of in-vitro meat and situates it within the world of online gastronomy as we know it—amid menus, chef interviews, critical reviews and the like.

    Continue reading “Bistro In Vitro” »

  • Bio-responsive spaces
    May 19, 2015 | 4:48 pm

    DynamicSanctuary

    At last week’s Sight Unseen Offsite event in New York, Ford partnered with indie design studio The Principals to create the “Dynamic Sanctuary.” The sanctuary is a sculptural space made out of plastic, Plexiglas and LED lights that connect to a heart rate monitor and fade in and out based on the wearer’s pulse. The space was meant to be a haven from the chaos of daily life and a “poetic metaphor for the design ideas behind Ford’s 2015 Edge vehicle,” said Sight Unseen.

    Continue reading “Bio-responsive spaces” »

  • Rosé’s normcore moment
    May 14, 2015 | 12:21 pm

    Rosé

    As summer nears, once again we’re on the cusp of “rosé season.” While late spring often sees attempts to elevate the red-headed stepchild of the wine world into a product worthy of connoisseurship, this year something different is afoot: a knowing celebration of rosé’s bland charm.

    For perhaps the first time, a wine label is emerging from the self-aware world of Instagram—and, no surprise, it’s a rosé. Continue reading “Rosé’s normcore moment” »

  • Snapchat TV
    May 12, 2015 | 5:25 pm

    Snapchat

    This summer, TV’s highest-paid female actress, Sofia Vergara, will star in a reality series launching exclusively on Snapchat. The series, titled Vergaraland, is co-produced by Fusion and Vergara’s production company, Latin World Entertainment. It will tell the story of her Hollywood life through the eyes of her 24-year-old son.

    Continue reading “Snapchat TV” »

  • Virtual reality theme parks
    May 11, 2015 | 4:12 pm

    TheVoid

    Some worry that the coming age of virtual reality could lead to an epidemic of digital shut-ins—why leave the house when you can “be” anywhere with the touch of a button? The Void, however, imagines a social space where virtual reality might draw people together—a 21st century take on the classic video arcade.

    Continue reading “Virtual reality theme parks” »

  • Intangibles
    May 7, 2015 | 6:37 pm

    Intangibles

    How much would you pay for a snap? A voicemail?

    Walker Art Center in Minneapolis has launched an online shop that could be considered a conceptual art piece itself. The shop sells what Walker calls “intangibles”—ephemeral, digital commodities such as personalized ringtones or custom avatars to use on social media. Prices range from $1.99 to nearly $4,000, for a virtual ocean-view property on the platform Second Life.

    Continue reading “Intangibles” »

  • WhatsApp marketing
    May 6, 2015 | 4:32 pm

    Clarks

    Clarks shoes in the UK recently launched a WhatsApp campaign to bring the brand to life for its fans. The campaign asked users to add three characters to their contact lists—“some of culture’s greatest innovators, rebels and fashion icons”—who were all fans of the shoes. The characters then sent messages, videos and Spotify playlists through the app, telling the brand’s story while interacting with Clarks enthusiasts.

    Continue reading “WhatsApp marketing” »

  • Facebook’s Anthology
    April 30, 2015 | 4:20 pm

    FacebookVideo small

    Video is king on social media—more than 4 billion are viewed per day on Facebook alone. To capitalize on that, Facebook has just introduced Anthology, a partnership with seven media companies with the aim of creating unskippable ads.

    Continue reading “Facebook’s Anthology” »

  • MyIdol
    April 27, 2015 | 4:55 pm

    MyIdol

    Social media is abuzz with tiny pole dancers. And rock stars. And pandas. All thanks to an app that takes the humble selfie to new heights of playful absurdity—and in 3D, no less.

    Continue reading “MyIdol” »

  • Tindergram
    April 17, 2015 | 11:03 am

    Tinder Instagram

    Swiping just got more interesting—with its latest update, Tinder lets users browse the Instagram feeds of their potential matches. The pairing (which, Adweek notes, seemed inevitable) offers “a sort of social diary, co-written by your friends and family” to help people better stalk their dates.

    Continue reading “Tindergram” »

  • RSSArchive for Things to Watch »