The Latest Creditworthiness Data Point: Mobile Battery Life
A common theme among FinTech startups is trying to find new ways of determining if a consumer is creditworthy or not. While many companies still incorporate tried and true FICO credit scores into their algorithms others have prided themselves on finding different tech-based indicators. In the past we’ve heard about startups looking at which internet browser an applicant is using, the time of day their filling out the form, and hundreds of other seemingly insignificant piece of data that add up to much more in order to assist with lending decisions.
Now CNN Money reports on the Singapore-based FinTech firm Lenddo and their new data point idea: cell phone battery life. How does that work? According to Jeff Stewart, the company’s founder, the idea is that lenders can look at some of the patterns and habits that your mobile phone data exposes. In the case of battery life the company says that information gathered over time (so your real-time battery level is irrelevant) can demonstrate consistency as well as indicate forethought and planning.
That’s far from the only cell phone data Lenddo’s software looks at as well. Messaging, browsing activity, the apps you have downloaded, and the WiFi networks you use may all be integrated into their proprietary algorithm along with thousands of other bits of data. Ultimately this algorithm is supposed to give lenders an idea of how likely the borrower is to default on a loan. “Online social and [mobile] behavior are predictive,” Stewart said. He added that the software also takes into account if everything looks too perfect, saying “Our algorithm looks poorly upon someone who is too robotic.”
Obviously some may have some concern about privacy issues this type of software raises. However the company says the data collected is never shared with lenders or with any third parties. In fact the information is only accessed during the one-time credit assessment — a process that only takes three minutes to calculate a rate for the borrower.
Incidentally Lenddo doesn’t actually do the lending itself. Instead it leases its software to banks who they can add it into their current apps or have a new one built by Lenddo. Since officially launching in 2015 the company has mainly focused on lenders in emerging markets where traditional bank accounts and credit cards aren’t as common as smartphones are. In fact the company takes pride in allowing those who otherwise wouldn’t be able to get a loan or build credit to do so. Lenddo has yet to publically release any information about how many loans their software has had a hand in but they say their goal is to help one billion people by 2020.