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Banks can use digital exhaust to identify potential borrowers

At any given moment, billions - perhaps trillions - of digital transactions occur simultaneously around the world: Some are financial, but most involve the exchange of information. With all that data floating around, some of it is bound to get lost and end up drifting through digital space. This data is known by many as "digital exhaust," according to Telos.

"Digital exhaust may seem like data waste, but it can actually contain valuable insights."

What uses does it have? Quite a few, apparently.

Harvard Business Review recently reported that some tech companies were collecting and aggregating data exhaust from their email and calendar platforms to figure out what sales associates were spending the most time selling, and how they spent their time. This helped some of these businesses determine that too much time had been spent on lower-priority clients, leading to a reallocation of resources. 

Banks can similarly collect digital exhaust as a type of alternative credit data to determine the creditworthiness of potential new borrowers. Doing so may allow them to surpass the limitations of traditional credit-scoring methods: Because FICO, Vantage and the other best-known scoring models are laser-focused on obvious debts and credit flow, they can ignore other indicators of positive - or at the very least, positively trending - economic status.

Consider this: A bank customer pays rent on time each month via a checking account, having arranged automated withdrawals. The bank has records of these transactions; they'd be considered digital exhaust. But not all credit scores count rent. They might only see her student loans and automatically brand her a credit risk, when that might not be the full truth.

Any bank's computer network will be chock-full of similar data points, and it'd be unwise to ignore them. That said, SecurityLedger noted the importance of considering security when collecting data exhaust and not allow private customer data to escape the institution's purview. 

Contact Microbilt today to learn more about alternative credit decisioning tools that can better identify viable borrowers. 

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