big data | May 26, 2013

All Data Is Credit Data: Douglas Merrill On Transforming Wall Street [VIDEO]

"About one out of every three Americans couldn't come up with $1000 on a month's notice," big data speaker Douglas Merrill says in a talk at TEDxNewWallStreet. That implies, he adds, that most Americans couldn't scrounge up a few hundred bucks in a few weeks if they needed to. These aren't people who are suffering from the financial meltdown or who are out blowing their savings on flat screen TVs, he explains. They are people who essentially live paycheck-to-paycheck without a savings account to fall back on if something goes wrong. For about 50 per cent of the people who are faced with a short term credit crunch (a life surprise, he says), being a bit short on rent or needing some extra cash for a prescription requires help from some kind of creditor.

For some people, that's no problem—they can just take out a loan or apply for a new credit card. But, as Merrill says, there are huge gaps in the way that lenders develop credit scores that could impact your ability to access traditional credit. That leaves some Americans dropping into the pawn shop and payday loan world where the fees charged are almost as much as the money given out. We need to stop relying on traditional forms of FICO credit scores, he says, because "we're computing a number that is fundamentally wrong, it's simply not the right number." Instead of determining someone's credit risk based on a few, often flawed points of data, Merrill suggests we see all data as credit data. That way, we can get a more complex picture of the person looking for a loan and thus, more accurately define their credit risk. 

This is what Merrill is doing with his big data underwriting firm As he stresses in the end of his speech, he's not talking about high credit risk people who want to take out mortgages. Solving the credit access problem could play a vitally important role in the lives of people who need to buy a set of tires, or pay for a check-up for their sick child. Harnessing data and data storage, he says, could not only transform the lives of millions of people—it could also transform Wall Street and the entire credit industry. In his widely applicable talks, Merrill explains how companies can better analyze their data and make better choices based on already existing information. As the former Chief Information Officer at Google, Merrill is a champion of innovation. And, his speeches combine the right mix of hard-hitting stats with a rousing stage presence to show you how to innovate within your own company in this new technological age.

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big data | May 23, 2013