Alternative Data: Many Solutions In One Data Source

Today more than ever, companies need a combination of specialized human resources and new technology implementations to achieve continuous business growth. This way, teams can optimize time more efficiently, reaching the market faster and more effectively than their competitors.

While different types of software perform specific tasks, such as sales and marketing management, fraud detection, and user experience improvements, finding tools that fit the maximum functionality in a single platform is the key to success.

It allows companies to reduce costs and generate a much more coordinated workflow between different areas. New applications that combine alternative data and artificial intelligence are useful in bringing multiple solutions together in one place.

What Is Alternative Data?

Alternative data is information that comes from non-traditional sources such as phone bills, internet purchases, bill payments, and applications, among others.

These are read by artificial intelligence algorithms that can generate non-linear models of customer behavior in real-time.

The origin of alternative data responds to the need for a more inclusive credit scoring approach, allowing credit invisibles to access fair risk assessments.

Today, companies from multiple sectors (such as insurance, retail, or BNPL) are looking to add alternative sources to their products due to the wide range of solutions and the quality of insights obtained.

Moreover, these new insights make it possible to find a comprehensive solution that offers valuable answers to various marketing, UX, cybersecurity, and sales questions, among others. 

Alternative Information And Its Multiple Applications In One Tool

There are many types of alternative data. One example is telco data collected by telecommunication companies (mobile phone usage, call and SMS records, network status, server logs, SIM card swap, billing and top-ups, and roaming data).

Another is psychometric data, which describes an individual’s psychological abilities and behavioral styles. The list of alternative data sources is long.

However, one of the most complete alternative data types is alternative data coming from smartphone metadata.

Through the analysis of these digital and anonymous footprints, companies can obtain multiple insights for different departments inside a company, plus it is complementary to other types of data.

An Ally For Sales And Marketing Teams

Alternative data coming from smartphone metadata can help companies have a better knowledge of their customers. For example, the marketing team can better understand their behavior by knowing what apps a person has on their phone.

Another example is an insurance company would not grant life insurance with the same conditions to someone who shows a stronger interest in risky sports than someone who does not.

Or, in the case of a lender, it would probably consider a lead that has online betting apps riskier than one that does not.

Detecting Calendar Events

Another example of how this type of alternative data can help understand a person’s profile could be by detecting calendar events: the habit of upcoming scheduling activities can indicate how organized a person is and how well they plan.

This behavioral indicator, along with others, can help to understand more granular consumer behaviors and lifestyles. It can also create better segmentations to offer more personalized products or services.

This data is obtained online and in real-time, making it easier to capture new leads anytime and anywhere, offering tailored products at the moment.

An Effective Fraud Detector

Alternative information from phone metadata is a great tool for preventing fraud. It can detect applications from suspicious devices, such as locked phones or those with low usage (scarcity of contacts or media files).

It can also recognize when multiple subscriptions are made from the same IP, browser, or device and when someone changes key information multiple times in the same application.

According to the FBI’s Internet Crime Report 2021, last year’s cyber fraud caused losses of approximately $6.9 billion[1]. All this data obtained instantly makes it easier to filter out customers who seem suspicious, avoiding fraud that can result in large sums of money.

Insights To Improve UX

Designing an interface for digital natives is not the same as designing an interface for people with little contact with the online world.

Knowing the customer’s digital skills makes the difference between a rewarding experience and one that generates frustration in users. For example, through smartphone metadata, it is possible to detect which kind of programs or applications a person uses.

Therefore, a person with basic phone apps possesses a different level of technical aptitude than someone who, for example, uses a variety of programs like virtual wallets or work applications.

Likewise, this new alternative data allows UX teams to detect actions that indicate hesitation, abandonment, or data manipulation, giving them the insights they need to improve the areas of greatest conflict during navigation.

Data Protection And Compliance

Despite its benefits, alternative data models could still threaten compliance risk. Personal information is a sensitive subject for many local regulations, and not respecting how data might be collected and managed can lead to painful headaches.

Taking Care Of The Legal Risks

Therefore, it is important to know if the provider complies with the local data protection laws when choosing an alternative data vendor.

Thus, selecting a vendor that uses non-personal metadata information is a must-have for companies that want to take advantage of all the alternative data benefits without incurring any other legal risks.

A Solution For The Future

By exploring the multiple benefits of alternative data, it is clear that investing in various technological tools can help solve essential issues.

The best technologies can integrate several solutions at once. Therefore, the different teams can perform their tasks in coordination and avoid conflicts and misunderstandings. Alternative data offers this.

By leveraging multiple alternative sources, numerous business issues can be solved at the same time and for a wide variety of departments, from marketing to fraud.

Furthermore, this integration of several solutions into one will favor the scalability of the business, reaching new customers more securely and efficiently.

About Michele Tucci

Michele is the MD of credolab’s Americas and its Chief Strategy Officer. Prior to joining credolab in 2018 as Chief Product and Marketing Officer, Michele worked on international consulting assignments, product management, and business development roles with the likes of Capital One, MasterCard, Intesa Sanpaolo Bank, and Telecom Italia Mobile.


Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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