Abstract
Emerging markets contain the vast majority of the world's population. Despite the huge number of inhabitants, these markets still lack a proper finance infrastructure. One of the main difficulties felt by customers is the access to loans. This limitation arises from the fact that most customers usually lack a verifiable credit history. As such, traditional banks are unable to provide loans. This paper proposes credit scoring modeling based on non-traditional data, acquired from smartphones, for loan classification processes. We use Logistic Regression (LR) and Support Vector Machine (SVM) models which are the top performers in traditional banking. Then we compared the transformation of the training datasets creating boolean indicators against recoding using Weight of Evidence (WoE). Our models surpassed the performance of the manual loan application selection process, loans granted through the models criteria presented fewer overdues, also the approval criteria of the models increased the amount of granted loans substantially. Compared to the baseline, the loans approved by meeting the criteria of the SVM model presented -196.80% overdue rate. At the same time, the approval criteria of the SVM model generated 251.53% more loans. This paper shows that credit scoring can be useful in emerging markets. The non-traditional data can be used to build algorithms that can identify good borrowers as in traditional banking.

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Feature selection and feature ranking are two aspects of the same learning task. They are well studied in batch scenarios, but not in the streaming setting. This paper presents a study on feature ranking from data streams in online learning regression models. The main challenge here is the relevance of features might change over time: features relevant in the past might be irrelevant now and vice-versa. We propose three new online feature ranking algorithms designed for Hoeffding algorithms. We have implemented the three methods in AMRules, a streaming regression algorithm to learn model rules. We compare their behaviour experimentally and present the pros and cons of each method. Copyright 2017 ACM.

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