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Roongkiat Ratanabanchuen, Ph.D.
The next era of
lending business
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Alternative data and pain points in lending
business
Prepared by Roongkiat Ratanabanchuen, Ph.D. 2
3
Why do we need alternative data?
Prepared by Roongkiat Ratanabanchuen, Ph.D.
What are the main problems
in terms of lending?
Thin file
No-hit
(No bureau
record)
Credit invisible
Asymmetric information!Moral hazard
Adverse selection
1. Transaction-based lending 2. Relationship-based lending
Recent credit, 5%
Depth of credit, 21%
Balances, 11%
Available credit, 3%
Payment history, 40%
Utilization, 20%
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Information for making lending decision
Prepared by Roongkiat Ratanabanchuen, Ph.D.
5
Information for making lending decision
Prepared by Roongkiat Ratanabanchuen, Ph.D.
Digitization
Big data stored in file-based
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Information for making lending decision
Prepared by Roongkiat Ratanabanchuen, Ph.D.
Conventional data
• GDP, Inflation, Consumption
• Import/Export
• Financial statement
• Annual reports
• Corporate news
• Changes in shareholder structure
• Industry outlook
Alternative data
• Satellite imagery
• Social data
• Google trend
• IoT sensor device
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Information for making lending decision
Prepared by Roongkiat Ratanabanchuen, Ph.D.
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Fintech providing information
Prepared by Roongkiat Ratanabanchuen, Ph.D.
The future of lending landscape
Prepared by Roongkiat Ratanabanchuen, Ph.D. 9
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Alternative data for lending
Prepared by Roongkiat Ratanabanchuen, Ph.D.
Players in the credit scoring are
now experimenting to use
alternative data to predict default
rates.
Source: Rieke (2014)
11
Alternative data from smartphones
Prepared by Roongkiat Ratanabanchuen, Ph.D.
Mobile banking platform
Location services
Transaction data – bills, purchases, sends and receives
Communication habits
Clickstream data
Internet usage – web site, facebook, Instagram, whether forecasts
Call patterns – timing, frequency, and duration of calls
Prepaid-minute purchase patterns
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Alternative data from smartphones
Prepared by Roongkiat Ratanabanchuen, Ph.D.
Alipay
Sesame
credit
score
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Alternative data from smartphones
Prepared by Roongkiat Ratanabanchuen, Ph.D.
Utility bill and supplier data
Bill payments – frequency and timing
Wholesale suppliers – demand patterns and payment patterns
POS devices and retailer loyalty program
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Alternative data from smartphones
Prepared by Roongkiat Ratanabanchuen, Ph.D.
Utility bill and supplier data
What is actually
the main reason
of E-market place?
Source: BOT
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Alternative data from smartphones
Prepared by Roongkiat Ratanabanchuen, Ph.D.
Psychometric testing
Knowledge, abilities, attitudes and personality traits
Cognitive biases – long and short term biases, opportunisms, and overconfidence
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Alternative data from smartphones
Prepared by Roongkiat Ratanabanchuen, Ph.D.
Public records
Address zip code
Records of disbursement
Health inspection reports
Police reports
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Alternative data from smartphones
Prepared by Roongkiat Ratanabanchuen, Ph.D.
Social media data
Social media usage
Posts and texts
Image analysis
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Lending landscape in Thailand
Prepared by Roongkiat Ratanabanchuen, Ph.D.
Relationship-based lending
Transaction-based lending
Presented by Roongkiat Ratanabanchuen, Ph.D. 19
Thank you
