On the Rise of FinTechs: Credit Scoring Using Digital Footprints. (12th September 2019)

• Record Type: Journal Article
• Authors: Berg, Tobias; Burg, Valentin; Gombović, Ana; Puri, Manju
• Editors: Karolyi, Andrew
• Is Part Of: Review of financial studies. Volume 33:Number 7(2020)
• Page Start: 2845
• Page End: 2897
• Publication Date: 2019-09-12
• Subjects: Finance -- United States -- Periodicals; Finance -- Periodicals; 332
• DOI: 10.1093/rfs/hhz099
• Languages: English
• ISSNs: 0893-9454

Abstract

Abstract: We analyze the information content of a digital footprint—that is, information that users leave online simply by accessing or registering on a Web site—for predicting consumer default. We show that even simple, easily accessible variables from a digital footprint match the information content of credit bureau scores. A digital footprint complements rather than substitutes for credit bureau information and affects access to credit and reduces default rates. We discuss the implications for financial intermediaries' business models, access to credit for the unbanked, and the behavior of consumers, firms, and regulators in the digital sphere. ( JEL G20, G21, G29)