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- Extending credit is difficult.
- One needs to do it over multiple business cycles to build the experience of doing it profitably.
- GS have announced they are leading $50m investment in Deserve.
- “Deserve offers credit cards directly to nontraditional consumers using machine learning and alternative data to deem creditworthiness”
- There are so many things wrong with this statement.
- “Nontraditional consumers” usually means those of poorer credit quality – which is risky.
- Yet Deserve knows how to price this risk (despite having no experience) using “machine learning and alternative data”.
- We will see how this turns out in the next recession.
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