What Types of Customer Data Do Fintech Firms Use?

To assess customer creditworthiness, fintech lenders may look at credit scores and cash flow data. But these lenders use “nontraditional” data, too, noted then-St. Louis Fed Executive Vice President Julie Stackhouse during a 2019 Dialogue with the Fed event.

As Stackhouse explained, nontraditional data include customers’:

• Cell phone operating systems
• Education
• Digital “breadcrumbs,” such as borrowers’ social media activity

“The farther we get from this cash flow data, the more people like me worry,” said Stackhouse, who oversaw Supervision functions at the St. Louis Fed for many years. “And here’s why … we don’t know if that’s fair.”

She explained how regulators help ensure that banks lend fairly, with banks needing to prove to regulatory staff that they have obeyed fair lending laws and rules, such as the Fair Credit Reporting Act.

Additional Resources

• Dialogue with the Fed: How Fintech is Transforming Banking
• On the Economy: The Basics of Fintech