On the Rise of Fintechs – Credit Scoring Using Digital Footprints

51 Pages Posted: 2 May 2018

See all articles by Tobias Berg

Tobias Berg

Frankfurt School of Finance & Management

Valentin Burg

Humboldt University of Berlin

Ana Gombović

Frankfurt School of Finance & Management

Manju Puri

Duke University - Fuqua School of Business; NBER; FDIC

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Date Written: April 2018

Abstract

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. Using more than 250,000 observations, we show that even simple, easily accessible variables from the digital footprint equal or exceed the information content of credit bureau scores. Furthermore, the discriminatory power for unscorable customers is very similar to that of scorable customers. Our results have potentially wide 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.

Suggested Citation

Berg, Tobias and Burg, Valentin and Gombović, Ana and Puri, Manju, On the Rise of Fintechs – Credit Scoring Using Digital Footprints (April 2018). NBER Working Paper No. w24551. Available at SSRN: https://ssrn.com/abstract=3170770

Tobias Berg (Contact Author)

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Valentin Burg

Humboldt University of Berlin ( email )

Unter den Linden 6
Berlin, AK Berlin 10099
Germany

Ana Gombović

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Manju Puri

Duke University - Fuqua School of Business ( email )

100 Fuqua Drive
Box 90120
Durham, NC 27708-0120
United States
919-660-7657 (Phone)

NBER

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

FDIC ( email )

550 17th Street NW
Washington, DC 20429
United States

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