The utility of alternative data is so broad that it reaches multiple industries such as: Bank & Consumer Finance, Buy Now Pay Later, Digital Lending, Neobanks & Challenger Banks and Ride Hailing.  Its wide use explains the success of alternative data in recent years and how new sources of information are redefining the game.

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In this article, discover more about this in specific with more real-life examples of how credolab has helped various industries.

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🏦 Banks and Consumer Finance 🏦

In the case of Banks and Consumer Finance, alternative credit scores enable customer creditworthiness predictions like never before. By applying scoring algorithms to anonymous metadata, companies can obtain robust personalised models of human behaviour in social, spatial and sequential contexts. Therefore, large-scale phone-based metadata with behavioural mapping abilities empowers organisations to infer financial wellbeing based on spending patterns. This dramatically improves companies' access to new market segments, such as the new-to-credit (NTC), new-to-bank, thin file, millennials and self-employed.
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• 👨‍💻 Challenge: Improve the performance of the portfolio of a consumer finance company
• 💡 Solution: Embedded Android and iOS credoSDK into their consumer app
• ✅ Result: Developed a model with Gini of 0.48 that helped drop delinquency by 58.2% in 2 quarters

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💻 Digital Lenders 💻

Digital Lenders are also benefiting from alternative data.  Micro, small and medium-sized digital lenders can struggle big time to achieve business growth; all the metrics might be aligned, but access to capital may be lacking giving larger companies an unfair advantage. Alternative credit scoring can help digital lenders to create more accurate credit ratings and provide more loans to new customers, thus achieving the desired growth.
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• 👨‍💻 Challenge: High Bad Rate, requiring improved credit underwriting by adding a new scorecard
• 💡 Solution: credoWeb SDK (Javascript) integrated into the web-browser-based loan application form
• ✅ Result: Developed an enhanced integrated model with Gini uplift of 0.09 through credoWeb
• 🤝 Business benefits: Significant reduction in default and opportunity for higher approval rates for profitable growth
  

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💰 Buy Now Pay Later 💰

“Buy Now Pay Later” (BNPL) has had huge success in recent years as a tactic for acquisition and customer loyalty.  Alternative information is essential so that companies can segment those potential clients that would most likely meet their debts. The travel industry is one of the many industries that can benefit from this charging system. For example, companies can retain customers who have fulfilled a purchase by offering more payment and credit options. In turn, BNPL can expand to new customer segments who do not have a credit card and who need to find new financing options to be able to secure those long-awaited trips.
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• 👨‍💻 Challenge: Credit line type offering with short term and payment cycle and longer credit bureau data refresh cycle
• 💡 Solution: Embedded CredoSDK (Android & iOS) to their existing mobile app
• ✅ Result: Developed a model with a Gini of 0.52.
• 🤝 Business benefits: Lower credit losses at the same level of approval by sharper Probability of Default prediction

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📲 NeoBanks and Challenger Banks 📲

Alternative data can also help NeoBanks and Challenger Banks to discover an untapped source of data to de-risk a whole new market, such a: Unbanked, new-to-credit, Gen-Zs, gig-workers and small business owners that despite their creditworthiness might have failed the traditional credit test. By using alternative data scores NeoBanks and Challenger Banks can create a path for these individuals to access mainstream financial services.
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• 👨‍💻 Challenge: Reduce fraud levels and manual verifications of newly registered current account customers
• 💡 Solution: Embedded Android and iOS SDK into NeoBank's app
• ✅ Result: Developed a model with a Gini of 0.49. Identified almost 70% of new customers whose devices looked like confirmed eKYC or fraudulent ones, including those that opened multiple accounts with a single device

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Lastly, alternative scoring can benefit Ride-Hailing Companies such as Grab, Gojek and Uber to rate the creditworthiness of a driver and help them acquire a car. In this way, companies set up a virtuous circle where they ensure driver loyalty and, therefore, improve their service which further leads to happier customers.

The scope of alternative data is growing. The use of new credit rating models integrated with artificial intelligence impacts a wide variety of industries by modifying the rules of the game. The competitiveness of companies is determined, today more than ever, by the possibility of individualising people and offering personalised products and experiences according to their needs. Mass offer schemes become obsolete in the face of new technologies and consumer changes.

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