Data Lending Product |
4 mins read
E-wallets, also known as digital wallets, store some personal as well as financial information to facilitate digital transactions, such as online purchases and bill payments. This information stored in e-wallets, also referred to as e-wallet data can give insights into an individual’s spending behaviour and can help financial service providers make smarter credit decisions while lending to such individuals.
Speaking of Indonesia, the region has experienced significant growth in the adoption of e-wallets and the same is expected to grow further as more consumers become comfortable with digital payments, backed by the high level of smartphone penetration in the region. The growing adoption of e-wallets and the data being generated with their use has made it increasingly crucial for financial service providers to tap into this data to gain insights for making smarter lending decisions, especially in the absence of substantial financial information from traditional sources.
E-wallets are a source of transaction and geolocation data of the users that can help financial service providers better underwrite such individuals and can also help with the loan collection process.
Here’s how e-wallet data can help lenders make smarter underwriting decisions:
1. Spending behaviour– Transaction data such as the transaction amount, transaction description, frequency and transaction type can help better understand the borrower’s spending behaviour for making more informed underwriting decisions.
2. Repayment capacity– Frequency and size of business-related transactions can help a lender assess the performance of the borrower’s business and prepaid and postpaid information can help assess the borrower’s payment behaviour, allowing lenders to better evaluate the repayment capacity of the borrower.
3. Cash flow– A summarised view of the incoming and outgoing transactions can help analyse the borrower’s cash flow to gain a better understanding of the borrower’s repayment capabilities.
4. Enhance existing risk assessment– Data from e-wallets can be used to enhance the existing credit risk assessment models or processes with insights into the creditworthiness of the borrower.
The e-wallet data can also help lenders with the loan collection process, here’s how:
1. Transaction data– A borrower’s transaction data can help lenders understand the borrower’s spending patterns, spending date and frequency to devise a suitable collection strategy.
2. Availability of funds for repayment– Cash flow data from the borrower’s transaction information can help a lender evaluate the availability of funds for repayment and time their collection accordingly for a higher probability of repayment.
3. Geolocation data– The location data such as frequently visited locations and saved locations can help lenders track their borrowers for collections.
E-wallet data is fast growing in popularity but is still new to most lenders looking to leverage this data for smarter lending decisions. Some of the issues faced by lenders while leveraging the e-wallet data of their borrowers are:
1. Access– There are multiple e-wallets being used by borrowers and gaining seamless access to the e-wallet data from these multiple partners may be resource-intensive and a hassle to manage internally.
2. Data privacy and security– E-wallets contain not just financial information but also the personal data of the users. In order to encourage borrowers to share their e-wallet data, lenders need to ensure the privacy and security of the borrower’s data while extracting and handling the same.
3. Unorganised data– The data from different e-wallet partners is often retrieved in different formats and needs to be organised and summarised for analysis. This may be a resource-intensive task to manage internally.
PowerCred offers integration for the most used e-wallet in Indonesia for lenders looking to leverage the e-wallet data of their borrowers.
The e-wallet data that lenders can access using our integrations include:
1. Transaction data such as the transaction amount, currency, transaction description, transaction types and more.
2. Geolocation data such as frequently visited locations, saved locations, labelled locations and more.
PowerCred ethically sources consented data of borrowers from their e-wallets and shares it with financial service providers in an organised manner, with proper headers for ease of analysis. PowerCred is ISO 27001 and Kominfo compliant and maintains the utmost privacy and security of the borrower’s e-wallet data being extracted for sharing with the financial service provider. PowerCred’s e-wallet data is being used by lenders to better understand their borrower’s spending behaviour and repayment capacity and to devise effective collection strategies using the location data of the borrowers.