How it’s One of the most illustrative examples of the application of alternative data is Square aggregated, Capital now Square Financial Services (SFS), the SMB lending operations of FinTech player Square. SFS lends to businesses that were previously considered too risky or small, computed o昀昀ering loans as little as $500. As a result, the impact of micro-credit changes the growth trajectories for businesses that had previously been locked out of the 昀椀nancial system. and analyzed This opens up the possibility of an entirely new lending market that has yet to be ad- dressed by traditional banks. The data used by Square to evaluate prospective borrowers will drive looks nothing like the bank-style application process that requires historical tax returns, incorporation documents, and real estate leases. Instead, it measures business velocity advantage. through total sales via its embedded processor, number of payments per day, payment consistency, credit card primary account number (PAN) pro昀椀les, etc. How can alternative data become widely adopted? We believe that continued open access to APIs and the broader trend towards open banking can enable the creation of an ag- gregated data platform that draws signals from broad sets of databases. The proprietary insights can then be drawn from a combination of public and private data. We expect that how it’s aggregated, computed, and analyzed will then drive the advantage, as opposed to just access to the raw signals themselves. alternative data inputs32 ALTERNATIVE DATA PROVIDES A FRESH VIEW INTO FINANCIAL HEALTH SHARE VISIT PG 22