Financial institutions turning to alternative data

Financial institutions have long used data as a way to minimize risks. This data, however, typically comes from traditional sources (credit bureaus, SEC filings, etc.). But many (79% according to a Dataminr survey) are now turning to alternative data sources such as social media, cell phone data and product reviews to build deeper understandings of consumers and the risks they pose. Alternative data not only helps financial institutions reduce risks, it also helps them expand financial access to populations that might otherwise be overlooked and can help them improve services. At the end of the day, it is clear that the use of alternative data is becoming a necessary part of the future for financial institutions and, one day, will no longer be considered “alternative” and will simply become a part of the traditional data framework.