Search history can calculate better credit ratings than pay slips, says International Monetary Fund
- Reference: 1608267665
- News link: https://www.theregister.co.uk/2020/12/18/web_search_history_credit_ratings/
- Source link:
The IMF’s thinking is on offer in a new [1]blog post titled “What is Really New in Fintech” that finds just two truly novel things to discuss.
The post’s four authors – who work at the European Central Bank, the IMF, and the University of Amsterdam – say “new types of information” is one thing to watch out for.
“The most transformative information innovation is the increase in use of new types of data coming from the digital footprint of customers’ various online activities—mainly for credit-worthiness analysis,” they write, because factors like your income, employment duration, assets, and debts vary across the economic cycle. The result is that lenders get loose in good times but tighten up during downturns. The latter outcome helps nobody.
“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,” the authors write. With a little AI/ML fairy dust sprinkled on that data, the authors say: “these alternative data sources are often superior than traditional credit assessment methods.”
Delicious irony: Credit rating builder Loqbox lets customer details and card numbers slip after 'sophisticated attack' [2]READ MORE
When such data produce better results, the authors argue it can “can advance financial inclusion, by, for example, enabling more credit to informal workers and households and firms in rural areas.”
The post’s second new thing to watch is “new communication channels” that allow the likes of Facebook, Amazon.com and Alibaba to offer a platform for financial services companies that challenge existing players.
Facilitating competition and doing it online and therefore without requiring time-consuming branch visits, “generally improves customer convenience and makes financial intermediation more cost-efficient.”
What could possibly go wrong with Facebook, Amazon and Alibaba using AI and your browser records to facilitate offers from third-party financial services? Thankfully, the authors can find plenty of potential pitfalls, including security worries, changes in lending behaviour that challenge prudential regulation regimes, and the potential for new players to weaken banks and by doing so undermine the role they play in the wider financial system.
“Other critical areas include competition policy, to address the monopolistic tendencies of large digital platforms, related to network effects and the natural tendency to converge to a few large platforms; and data policies to ensure consumer privacy and efficient and safe collection, processing, and exchange of data,” the post suggests.
“Overall, while much of the technological progress in finance is evolutionary, its pace is accelerating fast. Fintech’s potential to reach out to over a billion unbanked people around the world, and the changes in the financial system structure that this can induce, can be revolutionary,” the four co-authors write. “Governments should follow and carefully support the technological transition in finance. It is important to adjust policies accordingly and stay ahead of the curve.” ®
Get our [3]Tech Resources
[1] https://blogs.imf.org/2020/12/17/what-is-really-new-in-fintech/
[2] https://www.theregister.com/2020/03/02/financial_startup_loqbox_data_breach/
[3] https://whitepapers.theregister.com/
Hmm, let's see
Primary device - older Firefox on Android (with paranoid blocking).
Secondary device - NetSurf on RISC OS.
Tertiary device - even older Firefox on XP (it's a rescued box for when I need Windows, never saw the point of upgrading to anything newer).
Search history? I'm playing about with something in TurboC right now "for the hell of it" so various searches related to nerdy crap like DOS int calls and which port to fiddle with to detect VSync.
I read The Register, The Guardian, and xkcd.
I'm not employed in IT. I do this for amusement (so don't bother telling me TurboC is a billion years out of date, I'm aware of that, but for something to run on 16 bit DOS, it's just the ticket).
And my credit rating is: FAIL, get a life.
Re: Hmm, let's see
Wow, TurboC! I never gave that a try. I did try my hand at some TurboAssembler - alas I think I threw the boxes out a few years back. Those were simpler times (programming-wise), not too many registers to worry about, direct memory access to stuff - but there are certain aspects I don't miss, like fine-tuning the autoexec.bat file to free up memory for certain games but load drivers for input devices for other games. I wrote some "startup menu" thingy so you could select which one to run - beats having four boot floppies sitting around and getting lost, or just slowly wearing out. Ooh, and configuring any hardware (before Plug'n'Pray), carefully selecting interupts and addresses. And ad-hoc-networking, via serial or parallel ports (I did fry one or the other...). Printer setup - with printer cables that had those dip switches in them. And no internet to search for the answers to those problems.
Good old times? Bah, humbug! Summers were scorching, the wasps were more agressive and the schools' caretakers were sadistic old buggers - in other word: hairy green things from AZ were really hairy green things from AZ.
Oh God, no
There is so much wrong with this that it's hard to come up with a succinct comment to reflect how I feel about it.
Clearly (especially with the idea of integrating with facebook etc) they are pushing for a world where you must fully expose your digital life to the financial institutions if you want to use their services.
That's me fucked then. I rarely use search for anything of interest to them and am the sort who minimises exposure of information about myself and my financial doings.
They're never going to learn enough about me for their 'AI' to even recognise me as a person, let alone work out how good a financial risk I am.
But then, I'm an old fart and they're probably expecting Covid-19 to take care of me.
Scary then hilarious
Non users of septic media are thus potentially sidelined in future, that's kinda scary. Then there's this quote
“Governments should follow and carefully support the technological transition in finance. It is important to adjust policies accordingly and stay ahead of the curve.”
The very thought that *any* government could 'stay ahead of the curve' is just so funny.
Icon, the consequence of the level of horror and humour colliding
Ouch.....
Well, as people should know, even in private browsing mode, your network use is known by your ISP and your favorite search engine - if you are using Google, it can be scary to look at your history and see what you were looking up 10 or so years ago, as the Chocolate Factory certainly has this data squirreled away somewhere.
So, Lock Picking Lawyer, EURIon constellations, muzzle velocity, making black powder using bishop's urine, atomic bomb assembly, Freeman Dyson & design of chemical weapons.... Not only am I probably already on a ton of watchlists, but I would guess that this would preclude me totally from any loan as a danger to humanity!!!
[Apple monitor stand]
[Apple mac pro wheels]
[where do the khardashians shop]
[gold plated toilet donald trump]
Now, that should give me a healthy credit rating. On second thoughts, I think that last search may have wiped out any gains from the earlier searches
So... hummm.... does looking for 'French maids porn' raise or lower your credit rating? Asking for a friend...
Given my opinion of how US credit ratings appear to be put together, it's got to be an improvement, although I am fascinated by what they'd deduce about my credit rating from my search history.
I guess if "how to defraud the bank" is one of the search questions then you've failed.