澳門大學工商管理學院金融科技學術沙龍論壇
UM FBA FinTech Academic Salon Forum
Seminar Talk – 004
FinTech Lending Meets Digital Payment:
Behavioral Screening in Open Banking
Prof. Shuaishuai GONG
Assistant Professor in Finance
Date: 29 March 2023(Wednesday)
Time: 1:00-2:00 p.m.
Venue: E22 FBA Lobby
Moderator: Prof. Rachel Xiaorong MA, Assistant Professor in Finance
Abstract
This paper provides micro-level evidence on the importance of digital payment data in credit screening. We exploit a unique and big dataset combining borrowers’ credit outcomes and sociodemographic information from a traditional bank with their comprehensive, high-frequency and transaction-level payment flows from a leading Fintech firm in China. We transform the borrower’s “soft” payment flows into over 2,000 “hard” and quantitative behavioral features for screening. Leveraging a series of machine learning algorithms with their strengths in expanding information contents, we show that even a small number of behavioral predictors can strongly outperform the sociodemographic information set in default prediction and help reduce the predicted default rate by 30%. In particular, some fundamental payment behaviors such as the patterns of time or method of one’s payments can well predict the borrower’s creditworthiness. We also find a set of novel behavioral traits with significant predictive power relative to others, such as the consistent behaviors in gambling with lotteries, consuming addictive goods, digital tipping on social media, or donating to others. Our paper has important implications for understanding the impact of technological disruption on consumer credit markets and the corresponding regulatory policies in the era of digital payment and open banking.
Speaker
Dr. Gong received his PhD degree in Finance from The University Hong Kong in 2022. Prior to joining UM, he served at The Hong Kong Polytechnic University as Research Assistant Professor of Finance for five months. Dr. Gong was an experienced industry practitioner, he served as FinTech product manager at Tencent from 2014 to 2017 and wireless network engineer at Huawei from 2011 to 2013 respectively. His areas of research interest include digital finance, family economics, and social finance. He has paper accepted at Management Science.
All are welcome!
