How do you collect the Alternate Data? How would you collect information from social media, if you aren't a friend of mine or a connection? How would you assess the subjective feeling on posting a gym picture of me working out into my credit worthiness? Or a status update about how that bitch broke my heart and I will have my revenge?

How do you get the data of my TV subscription? How do you know if I subscribe to HD channels? Or how many OTT platforms I have? What are my viewing habits? Do I watch explicit content or am I clapping my hands when Bade Miyan Chote Miyan run away from a blast?

Psychometric Data - How do you even begin to quantify my personality? Do you ask all your clients with smartphones to undergo a Brigg Myers Test? Intelligence? Ethics? How do these subjective factors become data points for any algorithm which does not have the capability to understand what is "right" and "wrong"?

Smartphone Usage? With all the hullabaloo surrounding Whatsapp chat privacy concern that occurred couple of years ago which resulted in Meta spending millions of dollars in reassuring the customer, are network providers willing to give this data to your FI to use in their algorithims?

Device Information? Are you really telling me that details of my apps, my internet history is available to bankers for their assessment?

I can understand gaining access to KYC details, ITR, Bank statements, credit scores, TPC checks. But how is AI or even for that matter a Credit Underwriter gaining access to my Alternate Data points?

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Hey Sagar. Very valid questions. here are some thoughts around it.

1. Regarding collecting these types of information, nothing short of an explicit user consent is likely to hold up against any reasonable regulatory or legal lens (at least for regulatd entities that lend). With the DPDP Act and other data protection and privacy provisions being implemented, this will become clearer. So the short answer is - the user consents to sharing this data. The methods in many cases in practice are questionable though - like the use of dark patterns in tricking people into sharing all this data especially smartphone usage information and access to SMS and emails etc. Routing data flow through something like the Aggregator framework makes it much more transparent.

2. Alternate data is still very much a WIP and at a relatively nascent stage. For example, simply analysing UPI cash flow data itself is something that's only finding its feet in underwriting now. A lot of what you mentioned such as subjective parameters of one's personality are still a while away.

3. Alternate data should also be seen as a incremental step. Credit history or a financial footprint is something you and I likely take for granted. However, for thin-file customers who would anyway have been excluded from the process, the use of alternate data can potentially make credit more accessible.

That being said, there is of course a whole other debate around the ethics of using some of this data!

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