One of the widely-reported consequences of the pandemic has been the accelerated migration of consumer purchasing activity to the internet. Indeed, for many consumers around the world e-commerce is not a complement to traditional retail activity, it is a convenient substitute that has replaced traditional in-person buying. The ease of buying online is undeniable; however, this form of commerce has consequences that many consumers and even businesses do not fully comprehend. One such consequence is the set of markers that we create as we browse and shop online. Commonly referred to as our "digital footprint," the specific features of our digital presence, and what they say about us, are increasingly important topics for researchers and innovators. 

A new paper from Tobias Berg (Frankfurt), Valentin Burg (Home24), Ana Gombovic (Deloitte), and Manju Puri (Duke) provides a fascinating view into this emerging line of research. Their new paper set out to understand whether a consumer's digital footprint can predict the creditworthiness of an online shopper as well as traditional credit-report databases. Their findings highlight just how much our digital footprint says about us and suggest that in the future everyday online activity may supersede traditional credit reporting with both positive and negative consequences for consumers.

As the authors note at the start of their paper:

Understanding the informativeness of digital footprints for consumer lending is significantly important. A key reason for the existence of financial intermediaries is their superior ability to access and process information relevant for screening and monitoring of borrowers. If digital footprints yield significant information about predicting defaults, then FinTech firms—with their superior ability to access and process digital footprints—can threaten the information advantage of financial intermediaries and thereby challenge financial intermediaries’ business models.