Income volatility and lack of savings unfortunately defines much of US society now. Nearly a fourth of the population does not have enough credit history, that even warrants a credit score. An even larger number have low credit scores, categorized as subprime. Many cannot even cover emergency expenses. Many such people unfortunately need to rely on payday loans, several of which charge usury- level interest rates, even up to triple digits. It has also become very difficult for banks to cater to non- prime customers. AI and alternative data though can help out in this situation. This involves a kind of data warehousing that is of high relevance to the fin-tech industry. Digital footprints strewn all over the digital space, can help track all these touch points. This system is also apt for fraud detection. Unlike several other industries these days, social media data does not hold much importance for the bankers.

Source:http://knowledge.wharton.upenn.edu/article/fintech-serving-invisible-prime-borrower/

Uploaded Date:08 June 2019