
Banking Startups Adopt New Tools for Lending - digisth
http://www.nytimes.com/2015/01/19/technology/banking-start-ups-adopt-new-tools-for-lending.html?ref=business
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7Figures2Commas
The media narrative of these startups is somewhat misleading. It sounds neat
to suggest that you can approve loans based on an amalgamation of seemingly
random data points, like proper capitalization, but the reality is that even
most of the alternative online lenders are using credit scores.

From Affirm's website:

> Affirm does a credit check to verify your identity and provide you with a
> financing offer when you sign up. This is a ‘soft’ credit check and will not
> impact your credit score. If you choose to complete a purchase and finance
> it with Affirm, we will do a single ‘hard’ credit check when your first
> order is processed by the merchant. This may have a minor impact on your
> credit score. For future purchases with Affirm we won’t need to check your
> credit again.

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ikawe

        "It is important to maintain the discipline of not trying to explain too much,” said Max Levchin, chief executive of Affirm. Adding human assumptions, he noted, could introduce bias into the data analysis.
    

This might be true, but I've heard this mentality before, and I feel like it
draws this incorrect picture of completely fair robots scanning the universe
of variables. Ultimately it's a [probably-white-upper-middle-class] human who
intuits which variables are worth further study.

[probably-white-upper-middle-class]: pick your favorite adjectives to describe
startup machine learning engineers.

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lazythrowaway
Kind of weird to have an article about alternative lending and big data, and
not mention Lending Club? The are the biggest player in the space by far and
IPOed only last month...

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psuter
Looks like the focus of the article is on alternative techniques to determine
creditworthiness. Lending Club, as I understand, relies mostly on traditional
credit scores, which does not make them particularly innovative for _this
particular aspect_ of lending.

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pbreit
By being online/mobile, aren't these companies already cutting out large
swaths of the people they ostensibly aim to assist?

Also, another ex-PayPal entrant: Vouch.

