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Creditworthiness is one of the driving forces behind the financial services industry, and as we saw in our previous example, people’s behavour is no longer explicable throught the assumptive, rigid models that we operate upon. People just won’t accept products and services based on a number off a balance sheet. We believe that banks have a considerable way to go before they begin to account for all of the behavioural intricacies which inform our spending behaviours, and in our previous newsletter we looked at American Express as an example of using data to create more finely tuned products and services.
But is this really enough? A recent article in Wired goes into great detail about Klout - the most famous (and in some ways most controversial) reputation measurement database online. We believe that this is an early signal for how credit ratings will take shape in the future. Banks will be able to assess your credit standing not just on the basis of how frequently you pay your bills, but also on the basis of your interest graph, social standing on Facebook and your eBay profile.
We think this won’t obviate the need for good old credit ratings. It’s more likely to complement them. We have recently seen Credit Karma top the finance app chart in the US. Its proposition is simple and infinitely useful – Credit Karma gives you access to your credit ratings in real time. It notifies you of events that might impact your standing in the process and connects you with the financial products that are most suitable for you. We think it’s only a matter of time before the world of traditional and social credit merge to the considerable benefit of everyone involved.
Sources:
Tech Crunch - CreditCarma's new iOS App
Wired - What Your Klout Score Really Means |
