A person’s utility bill can reveal a lot about their financial profile. And many banks and alternative lenders are using this data to underwrite loans, Sanjoy Malik, CEO and co-founder of utility data provider Urjanet, told Bank Innovation. 

“A consumer’s utility payment history reveals obvious things like does the person pay bills on time? How many times in a certain period of time did they miss their payments or made late payments?” Malik said. “This information can be useful to lenders, especially those that don’t just rely on traditional scoring methods.”

And indeed, many fintech lenders like SoFi, BlueVine, and OakNorth, among others have created a strong niche for themselves by applying artificial intelligence and machine learning models to analyze such non-traditional data to build the financial profile of a customer (consumer or SMBs) beyond FICO and other traditional methods.

For the consumer, alternative data sources like a person’s utility or telecom payment history, can come in handy for reaching the underserved population, who traditionally have a hard time getting loans from traditional lenders. ”

“FDIC estimates the underbanked population in the U.S. to be about 50 million adults,” Malik said. “But it’s not just the fintechs, “even banks are realizing the potential of this market and are becoming more open to using alternative data for lending.”

But, are consumers comfortable sharing this kind of data with their banks or alternative lenders?

The answer is, mostly, yes, Malik said. At least that’s according to a new study by Urjanet, which showed that 59% of those surveyed said they would be likely or very likely to share their utility and/or telecom payment history with a lender to improve their chances of being approved for a loan. Further, the survey found that 66% of respondents who had previously been denied a loan were even more willing to do so.

Based in Atlanta, Ga., Urjanet gathers data from over 5,000 utility providers in 40 countries and provides the data, on a permission basis, to industries like financial services and energy providers. Customers must opt-in to share data. Urjanet launched last year in fall and is currently in talks with several banks across the U.S., Latin America, Europe and parts of Asia. Although Malik could not disclose the names of those banks yet.

Utility and telecom payment data can also provide “nuanced information,” Malik explained. For instance, for a business, “there might be a certain time or season when its utility consumption might be greater than compared to the rest of the year. This could indicate that the business is seasonal, or even pinpoint the busiest season for that company. So this data can better inform the lender’s decision.”

Read the full report here.