US fintechs surpass banks in troubled areas, new study reveals

The use of alternative data sources and machine learning to assess the credit quality of applicants gives US fintechs an advantage over banks when it comes to small business lending, according to a paper from the Bank for International Settlements.

Using data sets from alternative lenders Funding Circle and LendingClub, BIS assessed the geographical footprint of fintech loan origination and the effectiveness of their credit scoring methods in predicting default.

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