Beyond KYC: Lenders turn to 'alternative' data to assess risk, detect fraud

Risk assessment firms are using data available publicly or obtained through user consent but is not available through credit bureaus to detect mule accounts, syndicates, and risky borrowers

Platforms that make decisions on risk levels are using alternative data sources to help lenders detect syndicates attempting to access credit from regulated entities as well as to enable faster, more accurate underwriting to new-to-credit (NTC) users.

 

Companies are also training models on multiple forms of alternative data such as location data, third party app usage, SMS data, payments transaction behaviour, and metadata on location of a user, among others, to further enable underwriting to NTC customers.

 

The detection of syndicates stems from analysing various forms of alternative data — such as multiple government IDs linked to a single mobile