M-RCBG Associate Working Paper No. 107

Revolution in Data: How new technologies are upending borrowing

Marshall Lux and Guillaume Delepine



This working paper focuses on the implications of Big Data in consumer lending. It begins by examining the multi-dimensional definitions of Big Data, as a technology and as a credit assessment tool. We then present findings from a series of industry interviews to share the state of the art of Big Data after the latest round of investment and technological change. In consumer lending, Big Data appears to serve as a valuable tool in preventing fraud, engaging customers more deeply, and making more confident lending decisions. Our stakeholder analysis indicates that there is potential for Big Data to benefit lenders, startups, the overall economy, and individual consumers. However, regulators should be watchful that Big Data does not abuse consumer data, either through increased aggregation or expanded ability to generate insights. We conclude by offering a framework and set of recommendations for preparing government to regulate the consumer lending space in the era of Big Data.

Download the paper in PDF format