Slashdot Mirror
Banks Using Mobile Phone Usage To Gauge Credit Risk
Hugh Pickens writes "A new startup is revolutionizing the way financial service companies meet the needs of an estimated 2.7 billion people worldwide with a mobile phone but no access to formal financial services by developing sophisticated modeling software that can look at usage data from consumers' mobile phones and make predictions about credit risk. 'There's a vast market of consumers in countries like Brazil, China, India, and the Philippines who want access to financial services like credit cards, loans, or insurance,' says Jonathan Hakim, chief executive of Cignifi. 'But while they may have jobs, and some have bank accounts, there really is no credit history for them.' The way you use your phone is a proxy for your lifestyle say the developers. 'We're looking at things like the length of calls, the time of day, and the location you make them from. Also things like whether you top up [a pre-paid SIM card] regularly. We want to see how stable the patterns are. When you look at that, you can create these behavioral clusters that give you information about users' appetite for new [financial] products, and their ability to repay a debt.' Currently operating in Brazil, Cignifi doesn't plan to deploy the technology in the US. in the near-term. 'The business opportunity is so much bigger in Brazil, India, China, and Mexico, where you have around half a billion people in those four markets alone who have a mobile phone but no banking relationship.'"
The countries listed, and where credit is not usual for people but mostly businesses (and only then for billing duration), have it more right than US. In the United Status people need to take loans just to build up their credit history, which is just useless costs. The only justified things for loans should be loans for starting businesses, houses and maybe cars. Living on credit for your everyday things is just stupid and bad for economy. And this also includes credit cards, even if you pay them back as soon as you get the bill.
They just use this as a mean of hiding the fact that banks really have no idea if you'll be good for the money they are loaning you. They are just trying to get the contact numbers of your friends and work associates so they can harass them when you don't pay up.
So, phone companies are selling who i call, how long and where did i make the call to this companies? Isn't that invasion of privacy?
FUCK OFF
I normally do not use those strong tones in my slashdot replies but what I do, and what videos I watch are no ones business! Why is this even for sale?
When employers tried to call your doctors and pyschologists to weed out applicants with potential issues like depression people were outraged and HIIPA became law. The medical industry hates it but it was a must as in an alternative universe anyone who has taken an anti depressent would be labeled a credit risk and unemployable or someone with ADD would be unemployable and another credit risk etc.
I think the same should apply. I mean what is next? Installing video cameras that view into your house all over the street? Maybe looking for who you invite over or what you do in the bedroom next?
http://saveie6.com/
Course that would only be a sane thing to do if interest rates were positive and reasonably above the real rate of inflation.
Deleted
Pretty much all credit cards charge no interest if you pay in full every month. And many charge no fees to the cardholder. Indeed quite a few even give a small part of the fees they charge merchants to the cardholder to keep their business; as "rewards."
If you're not paying off your credit card in full every month, then you should consider rolling that debt into a longer-term debt product with a lower and more stable interest rate anyway. CC's charge usury rates if you keep a balance. Not quite as bad as payday loans, though.
Can you be Even More Awesome?!
I'm not a tinfoiler (in fact, part of my job is to try to help tinfoilers) but this is just another (? inexorable) step towards total information awareness. MasterCard and others have demonstrated an almost spooky ability to make future predictions based on seemingly irrelevant data, predictions that hold true and provide valuable guidance for large populations, despite the fact that individuals will be harmed. With a little more database interconnectivity, coupled with a gigantic complex of computers, there's no limit...
-Dan