Data has always been a key element of effective financial service delivery. Financial providers use demographic and geographic information to decide who to target; lenders use income, credit history, age and other factors to make credit judgements; and insurers use demographic data to target specific market segments and set premiums.
However, with the increase in real-time electronic “hard” information – which is easy to handle, analyse and store – we are beginning to realise a change in financial service delivery.
Take China’s Alibaba for example: the world’s largest e-commerce platform, credit and investment services provider, which operates almost entirely digitally without a branch network. It leveraged its e-commerce data to assess risk and offer credit services to businesses, and its electronic payments solution to channel mutual fund investments for the mass market.
Does Alibaba usage of big data signal a future model for financial services globally? Is this the direction in which providers may increasingly reach poor customers in other markets with the help of big data?
Read the full article written by Greg Chen and Xavier Faz published on CGAP here.