Why banks spy on your petrol bills

afr.com:

Major banks are secretly prying into customers’ spending – including the amount of petrol going into the family car – to identify those who are heading toward a home loan default well before they miss a repayment.

One technique, using technology developed by London-listed Experian, involves identifying borrowers who used to fill up their petrol tank to the top every time they visited the bowser – but now are only paying a round number and driving away with less than a half-filled tank.

This may seem like a reasonable response to stubbornly high retail petrol prices, as the average cost of a litre of fuel has stayed above $1.90 since early August, driven by geopolitical volatility and pressures on supply. But banks see the behaviour as a red flag a customer may be struggling more broadly with the rising cost of living, making them more at risk of becoming late on repayments compared to a driver filling up to the brim.

“This is a signal people are starting to find it tough,” says Jordan Harris, head of innovation at Experian. “Some banks are getting more sophisticated, looking at behavioural things people do.

“These are not the sort of things they have had to do in the past. But with interest rates higher, there are new ways to look at customers in stress and spot hardship at an earlier stage.”

Using Experian’s tools, banks can match up customer payments with particular merchants – like the petrol station – allowing them to see where, and how much, home loan customers are spending.

Banks feed the data into credit risk algorithms that help them determine the level of loan provisions that may be needed in a forward financial year to cover for defaults; and also which customers to proactively call to ask whether they are