Why do we need alternate data sources?
As per World Bank estimates, globally, only 69% of all adults have bank accounts. But the World Bank also states that 13% of all adult-held bank accounts are “inactive”. So that leaves us with only 56% of all adults worldwide with functional bank accounts. For this 56%, you might get some bank data to determine the person’s creditworthiness and offer them a loan. But what about the remaining 44% of the people? Many of them might be “credit-worthy”, but based on traditional banking data, you may dispose off of them. This is the point where alternate data sources enter the picture. In fact, alternate data sources such as web data can also help determine the creditworthiness of people having a functional and active bank account.
Why is web data the best form of alternate data?
While most other forms of alternate data need you to ask the customer for a specific document or needs you to go through other formalities, web data can help you gather a lot of information about a person without the need of going through too many hoops. You can analyze social media data from different websites, as well as location tags of images uploaded by a person to gather a lot of information about him. For example, if a person has mentioned New York as his place of permanent residency but there’s no record of him owning any property or having a rental agreement in the city, then there might be a possibility that he is lying. Similarly, you can check out his job details, where he is currently working, what position he is holding, where he has worked before, all from social media data, or even company or university websites.
When you are involved in transactions with a company, the stakes are even higher and hence the due diligence that has to be done, needs to be deeper. However since most companies have to make yearly financial data public, you will be getting a good idea about the stakeholders, the position of the company in the market, the profit and loss they are making, the current share prices, total debts and more. All this, only from scraping the web! Sounds incredible? Well, scraping data from the public domain is not illegal, and basically what you are doing is copying down some data that you can visualize with your own eyes, but instead, you are using automation to speed up the process.
How to integrate web data into your financial checks?
Although seemingly simple, web data is highly unstructured and comes in the form of text, videos, images, charts, graphs and more. Capturing the data, cleaning it and just storing it in a format that renders it useful itself can appear to be a daunting task. Hence you’d need the help of DaaS providers like PromptCloud so that your alternate data sources integration can work like a breeze and you can instead divert your attention to the best use of the newly found treasure trove of data to have better checks and balances in place.
Looking to gather web data?