By Lawrence White
LONDON (Reuters) – Does a cancelled gym membership spell financial disaster?
That is the type of question British banks are asking as they try to work out whether borrowers owing some 75 billion pounds ($96 billion) in home loans will be good for it when a payment holiday, introduced when the coronavirus crisis first hit, ends.
Lenders are scouring current account transactions, credit card spending and trends in Internet searches for clues about customer finances as part of a wider effort to understand the damage to their portfolios from the pandemic.
The once-in-a-lifetime mix of economic shutdowns, unprecedented government support and an uncertain path to recovery have upended old risk models, based on historical data, necessitating a more dynamic, forward-looking way of analysing lending risk. The searches involve pouring over anonymised data and are a way of surveying overall risk rather than individual customer habits.