Pandemic Shows Limits of Traditional Credit Models

In an op-ed in American Banker, the CEO of MeasureOne, Elan Amir, noted that traditional credit models are not well suited for taking into account a black swan event like we are experiencing today; lenders have had an expected response to the crisis: increase interest rates and tighten lending standards; this has resulted in limited availability of credit to consumers just when they need it most; lenders should be adding alternative data, such as utility data, banking data, social media information and academic data, into their underwriting model; there are regulatory concerns that can be allayed by obtaining the customer’s consent to use such data; Amir said that sourcing alternative data today is possible through innovative technology platforms and lenders should be doing everything they can to gain access to data on their prospective borrowers. American Banker.

  • Peter Renton

    Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.