Michael Turner: Credit Worthiness for the Unbanked
This profile was prepared when Michael Turner was elected to the Ashoka Fellowship in 2009.
The New Idea
Traditionally, one builds a credit rating through credit card and loan payments. However, millions of people in the US lack those methods of building a credit history, and so lack access to capital. However, many of those people do pay other types of bills regularly and are very credit worthy. The idea of gathering that other bill paying data and using it to determine credit worthiness is not new. However, in the decades since its inception, no one has managed to use it to get true access to capital markets for the unbanked---until Michael. Only Michael’s SDI initiative has been readily accepted by those who must buy in for it to succeed---namely, the large credit bureaus, as well as banks and governments. What is different? Rather than finding new ways to assess the unbanked for their credit worthiness, Michael is using and improving upon methodologies that are already in place for extending credit. By using alternative data and additional qualifying information (e.g. mobile phone and utility bills) that is readily available, and getting the bureaus to make this a part of the regular credit profile (rather than a separate rating scale), Michael is recasting the financially excluded in a different light. And because he has gotten the market (bureaus, banks, etc) to accept this, it is a financially self-sustaining solution. How has he done this? He has figured out what credit agencies and financial institutions want (because they are ever in need of expanding their client base) and how alternative data streams fit. Through Alternative Data Initiative (ADI), the existing credit agencies or banks pay for the data services and ensure they will use the outcome. At the same time, Michael is working with citizens’ sector organizations to help ensure the protection of vulnerable populations.