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Businesses The Almighty Buck

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.'"
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Banks Using Mobile Phone Usage To Gauge Credit Risk

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  • by FreeCoder ( 2558096 ) on Sunday January 22, 2012 @03:52PM (#38783701)
    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.
  • by Anonymous Coward on Sunday January 22, 2012 @04:02PM (#38783787)

    Money is debt too. Currency is nothing more than someone else's debt that you are holding. Revolving debt simply means you are holding LESS of others debt at any one time, making the economy not less, but more efficient.

    The downside is when the said revolving credit dries up. Then the ability of the currency system to function at all dries up (you need at least some cash in hand to do basic transactions).

  • by Chemisor ( 97276 ) on Sunday January 22, 2012 @04:08PM (#38783841)
    1. Avoid all debt
    2. Avoid all debt
    3. Avoid all debt
    4. Profit!
  • Seriously (Score:4, Insightful)

    by Billly Gates ( 198444 ) on Sunday January 22, 2012 @04:10PM (#38783877) Journal


    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?

  • by Colin Smith ( 2679 ) on Sunday January 22, 2012 @04:26PM (#38784017)

    Course that would only be a sane thing to do if interest rates were positive and reasonably above the real rate of inflation.

  • by hedwards ( 940851 ) on Sunday January 22, 2012 @04:39PM (#38784147)

    The problem isn't the interest rates in that regards, the problem is that the spread is so large. If I have an account at a bank the typical interest these days is roughly 0.1% on most accounts I've seen. A quick look at average rates reveals that low interest cards average out at about 10.75%. So on average they're borrowing money from account holders for 0.1% and they're lending it for an additional 10.65%. There is some overhead involved, but people wonder why savings rates in the US are so low. 0.1% is 1.9% below the Federal Reserves typical inflation target.

    I don't agree with Ron Paul on pretty much anything, but the fact is that he's dead on when it comes to the harm that the Federal Reserve represents. Tax laws are nothing compared with the income redistribution that's resulted form the Fed purposely creating inflation and holding interest rates well below inflation.

  • by zippthorne ( 748122 ) on Sunday January 22, 2012 @04:54PM (#38784287) Journal

    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.

  • by man_of_mr_e ( 217855 ) on Sunday January 22, 2012 @05:59PM (#38784975)

    Are you serious? I don't know of any family of 4 that can save money on $50k a year. Rent, clothing, food, etc.. they'd be lucky to save $100 a year, much less $10k.

    Raising a family is expensive. Insurance alone can cost upwards of $500 a month. I think you're incredibly naive if you think that someone can put away 10% of their salary at that level.

  • by dangle ( 1381879 ) on Sunday January 22, 2012 @06:03PM (#38785013)

    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...


  • by Anonymous Coward on Sunday January 22, 2012 @11:27PM (#38787759)

    I make $34K. My wife stays at home with our four kids. And we save about $400 a month.
    I know a lot of people think we're poor. Heck, the state says we're eligible for food stamps. But we don't do any of that stuff.
    We've had a mortgage for 8 years now, and are planning to pay it off in another 10.
    Oh, and no credit card debt at all.
    My job does give us really low-cost health insurance.
    I think that besides stupid credit cards, the biggest trouble people get in is student loans and car loans.
    I worked my way through college and busted my butt for a couple of tuition-only scholarships. I didn't borrow a cent.
    Paying cash for cars is certainly realistic, if you don't fall for the shiny. We've worked our way up to a nice SUV.

How many NASA managers does it take to screw in a lightbulb? "That's a known problem... don't worry about it."