On the Rise of FinTechs – Credit Scoring Using Digital Footprints
66 Pages Posted: 12 May 2018 Last revised: 15 Aug 2019
Date Written: July 15, 2019
We analyze the information content of the digital footprint – information that people leave online simply by accessing or registering on a website – for predicting consumer default. We show that even simple, easily accessible variables from the digital footprint match the information content of credit bureau scores. The digital footprint complements rather than substitutes for credit bureau information and it affects access to credit and reduces default rates. We discuss the implications for financial intermediaries’ business models, for access to credit for the unbanked, and for the behavior of consumers, firms, and regulators in the digital sphere.
Keywords: FinTech, Lending, Unbanked Households, Privacy, Credit Bureau Scores
JEL Classification: G20, G21, G29
Suggested Citation: Suggested Citation