Some concerns about the use of alternative data have been raised over the long-term consequences of fully reporting utility and telecom payments to credit rating agencies.
Recently, the World Bank issued a global credit information sharing standard that included a section on alternative data.
The World Bank steadfastly endorses the use of fully reported non-financial payment data in credit origination processes and considers it a powerful tool for driving financial inclusion in emerging markets.
The population is often not formally employed, lacks a credit history, cannot fulfill loan application requirements, and has insufficient capital.
Even when these requirements are fulfilled, lending institutions often have very little experience with clients' economic activity leading to untailored loan products.
Electronically-available alternative data, such as social media activity, bill payments, mobile telephone bills and metadata, rental payments, and electronic transaction data, could be used to score these individuals and enter millions in low-income countries into a more modern credit ratings system.