IMF Suggests Using “Digital Footprint” to Determine Creditworthiness | Hacker News Reader

IMF Suggests Using “Digital Footprint” to Determine Creditworthiness

imf.org

The IMF has suggested that new forms of information such as search and browsing history, purchase history, and ISP to determine credit worthiness. Link to blog post below quotes:

>> The use of non-financial data will have large effects on the provision of financial services. Traditionally, banks rely on the analysis of customer financial information from payment flows and accounting records. The rise of the internet permits the use of new types of non- financial customer data, such as browsing histories and online shopping behavior of individuals, or customer ratings for online vendors.

>> Fintech resolves the dilemma by tapping various nonfinancial data: the type of browser and hardware used to access the internet, the history of online searches and purchases. Recent research documents that, once powered by artificial intelligence and machine learning, these alternative data sources are often superior than traditional credit assessment methods, and can advance financial inclusion, by, for example, enabling more credit to informal workers and households and firms in rural areas.

[0] https://blogs.imf.org/2020/12/17/what-is-really-new-in-finte...

There are private companies which have been making use of social media profiles to determine creditworthiness for short-term payday loans for a while now. Kreditech is one example from Germany. www.kreditech.com

interesting, thanks. I would like to see how these scores correlate with traditional credit scores.

how is it even related ? :!

There are two answers. First we can steelman the idea and imagine that, given millions/billions of debtors we could aggregate enough data to notice trends and then be confident in relying on those trends without understanding causality. More dangerously, we could imagine that these data would be used to allocate more favorable lending terms to those individuals who spent their time browsing the "correct" websites.

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