Drew Cohen, Express Trade Capital
The nascent, burgeoning big data lending industry shows few signs of abating. For the foreseeable future, it will continue to complement, rather than supplant, traditional lenders. In the next five years, competition, as well as new oversight in the form of state and federal regulations and the expectant slew of fair lending class actions suits, will begin to winnow the number of big data industry players just as it has for every major American industry from the early days of the oil refinery boon 150 years ago to the telecom industry.
It will take years, however, for lenders to determine which specks and footprints of online information are ultimately useful, yet non-discriminatory. This iterative discovery for the holy grail of accurate, predictive data will be slowed given the constant flux of consumer’s online behavior. The ever-present specter of the next Facebook or Snapchat belching out new types of data will continually force the industry to pivot and recalibrate its models.
Just as the rise and variety of online data tracking tools has been big data’s raison d’etre, the consumer’s recent clamoring for anti-tracking software provides some reason for pause. As a possible harbinger of changing expectations, and to the publishing industry’s chagrin, Apple’s new iOS9 operating software released in September includes robust ad-blocking apps.
In the near term, however, the big data credit industry will continue to make aggressive inroads, and be a boon for potential borrowers with little or no payment history, such as students and new business owners. Expect the splintering of lending verticals to intensify as alternative underwriting firms aggressively expand from peer-to-peer to business-to-business ventures, as general proof of the data-mined lending concept is verified.
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