Several new startups have launched with the intent of lending to borrowers based on data gathered from a borrower's phone. This trend is playing out around the world as new lenders are figuring out how to use new datasets to more accurately determine creditworthiness.
Can you calculate someone’s creditworthiness based on how they use their smartphone? Several new startups are trying to do exactly that in a move to make lending and borrowing easier and less risky in developing countries that lack banking infrastructure. And because credit history — how to build it, how it’s measured and what it means — varies around the world, making sense of who to lend money to could be big business. In countries such as Kenya, the Philippines and Indonesia, where many consumers don’t live close to physical bank branches, startups including Branch and InVenture are enabling lenders to consider various aspects of smartphone use, from the volume of text messages a person sends and receives to the time of day that calls are made.