Banks Using Mobile Phone Usage To Gauge Credit Risk 196
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.'"
No science to it (Score:5, Interesting)
Let me get this right (Score:3, Interesting)
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?
Re:The Laws Of Personal Finance (Score:2, Interesting)
Loan? Did you somehow miss the first three sentences of GP's post? If you can't afford a house, don't buy one.
Speaking of home loans, I wonder how affordable homes would be if it were not for banks artificially giving everyone the "buying" power to get one (temporarily).
The typical home loan (30 years of debt) is financially insane, and has made home ownership (i.e. with no debt on the house) harder for everyone. Some of the price inflation caused by loans could be witnessed after the 2008 home mortgage "crisis" (market correction), but real estate is still vastly overinflated due to the ready availability of ridiculously enormous personal loans.
In actuality, the banks risk nothing on the loan (if you default, they repossess and keep your payments too), they only take a risk on the market (resale of the home being what you borrowed), which is only a risk to the degree that the market as a whole fluctuates up and down, owing to the huge diversity of loans that are made... and when the market is really down, the taxpayers bail you out.
Loans are a scam, perpetrated by banks, exploiting the financially unwise, to use against the rest of society. The only function that money lending serves is to give you the money you need to compete with someone who has access to the same services. The "winner" is the person who is therefore willing to sacrifice more in an unforeseeably long term. This has a negative evolutionary effect by giving economic preference to irresponsible people who spend what they're not sure they'll have (gamblers), rather than to responsible people who only spend what they can afford (planners). What it means in the end, after the bankruptcies, is that the responsible people end up paying one way or the other to cover the debts of the people who failed to repay what they agreed to. In the meantime, before the house of cards falls, the irresponsible people get to live it up, while the responsible people continue to lead humble lives.
In the end, the only people who win from money lending are the lenders. At least the way it works today, where the lender isn't actually lending you anything, they just trade you the money for collateral and simply trade the collateral back over the lending period. They would at least be less predatory if they took on an actual risk. That in turn would make them exercise better discretion about who to lend to, which in turn would reduce the inflationary effect on the market.
Re:The entire credit history thing is stupid (Score:4, Interesting)
He is serious, he suffers from the mentality that there's always *something* more you could do.
He wants them to live like crap. Never do anything, sit in the empty living room with no tv or cable and absolutely never do anything that isn't tied to staying alive.
You get about $1500 every 2 weeks on 50,000 a year give or take taxes. $900 rent because you're 19 with no savings and can't get a house loan, $300 for your $7K car with a $13K payment (because you have no credit and had to get a high interest loan without family to co-sign), $200 for gas and car maintenance, $300 groceries, $50 phone, $50 internet, $60 cable, $300 car insurance (again you're young and it's insane rates for even a boring daily driver vehicle), $230 health-insurance.
Let's see here.... If you get $3000 a month with the above bills that's a whopping $610 to show after the above bills. Don't get bad teeth or a $1750 root canal will sink you. Don't do nothing wrong and get hit while stopped by another driver, $1000 deductible will sink you. Don't break your left foot in 3 places, that's $2700 and that will sink you. Don't forget your landlord will foreclose the house and stop paying the mortage so you have to immediately come up with $3500 to move and that will sink you!
Heaven forbid two or more things happen within the same year then you're really fucked. Take away another $70 a month to use check into cash services to keep the gas in the engine and the lights on since you have no family to help...... Don't forget that $130 license plate renewal right on your birthday and don't forget your renters insurance.
Now other people bitch that you even have TV to show for your hard working middle class salary.... You should probably cancel that and sit looking at the wall since you definitely want to be *active* after busting your ass for 11 hour days to make up for the vacation (borrowed mind you with a sobbing call to HR) you used while the foot was broken!!!!
FUCK THESE PEOPLE. Middle class means I should be enjoying my life for my hard labor. Fucking poor people on food stamps often have more spending money with ZERO effort.
THIS is what is wrong with society. Also looking forward to no pension or Social Security in 2060 when I'll need it..... I bet that's already spent too right?