Harvard Researchers Assess Social and Industry Impact of Big Data Tools in Consumer Borrowing; Make Case for Increased Transparency and Oversight
CAMBRIDGE, Mass., Feb. 13, 2019 /PRNewswire/ -- Credit card companies are using a new array of vast datasets to precisely profile credit applicants, provide more targeted customer service, and combat fraud, according to a study released today by a senior fellow and a researcher at the Mossavar-Rahmani Center for Business and Government at Harvard's John F. Kennedy School of Government. The study analyzes the new techniques and information sources that carry the promise of better credit products for more people, but risk increasing customer intrusion and credit portfolio exposure.
The Financial Services industry invested approximately $9 Billion USD in Big Data in 2018, and that level of investment is projected to grow at 17% per year through 2020. This industry focus on new technology has sparked optimism among business operators and regulators alike, who recognize the promise of better techniques to reduce fraud and profitably expand access to credit. In the study, Marshall Lux, a Senior Fellow at Kennedy's Mossavar-Rahmani Center and a Senior Advisor at The Boston Consulting Group, and Guillaume Delepine, a Research Assistant at the Center, conducted interviews with credit card company leaders, Big Data service providers, and regulators, to document the state of the field and make recommendations for upcoming regulatory challenges.
In the paper, Lux and Delepine present the mechanisms via which Big Data is transforming consumer lending, identify risks that may concern policymakers, and outline an approach to governing algorithmic lending without stifling innovation.
The full paper can be downloaded at https://www.hks.harvard.edu/centers/mrcbg/publications/awp/awp107
Marshall Lux is a veteran financial consultant. He is available for interviews on "Revolution in Data."
About the Mossavar-Rahmani Center for Business and Government
The mission of the Mossavar-Rahmani Center for Business & Government is to advance the state of knowledge and policy analysis concerning some of society's most challenging problems at the interface of the public and private sectors. The scope of its work ranges from the local to the global. Drawing on the unparalleled intellectual resources of the Kennedy School and Harvard University, and bringing together thought leaders from both business and government, the Center conducts research, facilitates dialogue, and seeks answers that are at once intellectually rigorous and policy relevant. For more information, please visit www.hks.harvard.edu/centers/mrcbg.
SOURCE Mossavar-Rahmani Center for Business & Government
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