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BW Businessworld

Democratizing Credibility, Digitally !

We leave so many digital footprints everyday using app based cabs, online food delivery, epayments, ecommerce shopping, video streaming, e-gaming, consuming digital media, using mobile banking and via social media platforms. Why not use this data to build a new system of credibility, where everyone wins

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Credit Bureaus are simply broken, they were made for a certain era and do not belong to this digital era. We need a new democratized ‘trust token’ based digital credibility system built on the tenets of data security, data ownership and transparent multi-party consensual data exchange of composite digital footprints, powered by  technology.
 
Salons, Restaurants, Gyms whose businesses were impacted due to the COVID lockdown with no payments accruing to them for months should have been proactively “white flagged” by their lenders and their loans put on automatic moratoriums. With the avalanche of data on consumers and businesses, the bank and credit bureaus could have ensured this, but did not. Bank interest earnings compound when the borrowers default, credit bureaus earn credibility when lenders pull credit records with red flags.

The very real scenarios of wilful vs inability-to-pay defaults/late payments scenarios are never factored. A bad credit record can cluster-four-letter-word a borrower’s reputation ultra hard, leaving them for life, to the mercy of schmuck thin-file lenders offering loans on double the bank’s interest rates with iron fisted terms and conditions.

Credit Bureaus inter alia, earn money from lenders, the furnishers of data, by vaulting & scoring borrower data via their out-dated algorithms. The data is also packaged and sold as analytical reports to third parties. Credit card data and personal information from the bureaus, has been fairly consistently hacked, stolen and sold on the dark-web, the world’s digital black market.
Credit Bureaus are simply broken. They were made for a certain era and do not belong to this digital era. There are discrepancies in bureau reports with zero recourse for consumers. Consumers have zilch visibility on how their credit behaviour is scored, there is no two-way communication with the bureau, consumers can write ‘letters’ to the bureau and they can choose not to respond. India’s hawk central bank which prides itself on consumer protection does not have the bandwidth to stir up another hornet’s nest.

Probe yourself with three questions:
Why do only credit payment records, denote someone’s credibility, for instance, qualifying for a financial services job requires a mandatory credit bureau ping.

Why so much market power to these inefficient, slumbering and will eventually expire, credit bureaus ?

Everyday most of us leave digital footprints, should these not be accounted to determine our credibility.

Consumers deserve more & better, we need a new credibility revolution, a radically new alternate trust-based system to long broken Credit Bureaus, the half-century old anachronisms, expired, rent seeking institutions which have long outlived their utility. The new system can democratise credibility.

We leave so many digital footprints everyday using app based cabs, online food delivery, epayments, ecommerce shopping,  video streaming, e-gaming, consuming  digital media, using mobile banking and via social media platforms. Why not use this data to build a new system of credibility, where everyone wins.

We can build a democratized credibility system built on the tenets of data security, data ownership and transparent multi-party consensual data exchange of composite digital footprints, powered by  technology.

This new credibility system will comprise all players in the digital ecosystem - banks, consumers, billers, social media platforms, e-commerce companies, fast payment methods, payment gateways and  digital goods providers. The system will leverage technology to power, build and resolve trust issues. Consumers will control their digital footprints and decide what data to share, when to share and with whom to share.Think about the network effects of this composite credibility score.

A use case of the trust based digital credibility system could be tailored financial services and products. Think of a tailored risk premium depending on the credibility scores. Another, e-Commerce users could get early access to flash sales, based on their credibility. Further, ride hailing users who do not cancel rides when the driver is at their doorstep, could get preference, when demand outstrips supply. Also, fresh college graduates could begin building their digital credibility.

The use cases are infinite, each amplifying with the network effects of the new digital credibility system, powered by trust and technology.

Everyone wins !

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Credibility digitalisation

Vibhu Arya

The author is a Fintech and Consumer Internet specialist.

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