Why Smart Data is the Key to Future Lending Posted on : Jun 25 - 2017

Smart data the usable expression of the ominous big data is transforming lending practices for the better by enhancing privacy making lending affordable

Protecting Your Privacy

Privacy is at the forefront of the cultural discussion, and people are increasingly aware and uneasy about the data being collected about them. It’s not just headline-making data breaches that scare consumers. There is a creepy factor about companies knowing and analyzing their customers’ personal data and making decisions based on their findings. Still, lenders need to make informed decisions about their investments to ensure that they make smart loans that are mutually beneficial to all parties.

Big data has been a significant contributor to this decision making process. A recent article in The Economist noted that, when acquiring customer data, “social media profiles, web-browsing, loyalty cards, and phone-location trackers can help.” However, smart data is more protective of privacy because it doesn’t require input from a customer’s social media. It eliminates the need for questionable creditworthy designations based on social media posts or friend networks. Fintech is changing the way lending companies collect data by investing in new technologies that make big data more useful for making informed decisions. This means being less intrusive but more effective in appraising lending decisions. Smart data is forming the future of lending by producing better data that is more customer conscience; this is a win-win both parties because it improves privacy while allowing companies to increase their effectiveness.

The Big Cost of Big Data

Fintech is a novel industry because it eliminates preconceptions about how finance must operate and these changes are making lending more affordable and more inclusive. A report by Accenture encourages banks to compete with changing financial trends by adopting a digital-first approach to banking. Fintech transcends that approach by utilizing the power of digital to generate smart data that is cheaper to attain and analyze than traditional big data outlets. Companies are not willingly divulging their customer information, so financial institutions are paying high costs to attain the big data that drives their decisions. Meanwhile, smart data avoids these costs by using direct interactions like phone calls, the length of application, and financial transactions to generate usable data.  View More