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Abstract Small and Medium-sized Enterprises play a significant role in most economies by contributing to job creation and economic growth. A majority of such merchants rely on business financing, and thus, financial institutions and investors need to assess their performance before making decisions on business loans. However, current methods of predicting merchants’ future performance involve their private internal information, such as revenue and customer base, which cannot be shared without potentially exposing critical information. To address this problem, we first propose a novel approach to predicting merchants’ future performance using credit card transaction data. Specifically, we construct a merchant network, regarding customers as bridges between merchants, and extract features from the constructed network structure for prediction purposes. Our study results demonstrate that the performance of machine learning models with features extracted from our proposed network is comparable to those with conventional revenue- and customer-based features, while maintaining higher privacy levels when shared with third-party organizations. Our approach offers a practical solution to privacy concerns over data and information required for merchants’ performance prediction, enabling safe data-sharing among financial institutions and investors, helping them make more informed decisions on allocating their financial resources while ensuring that merchants’ sensitive information is kept confidential.

Abstract Recommending relevant items to users has become an important task in many systems due to the increased amount of data produced. For this purpose, transaction datasets such as credit card transactions and e-commerce purchase histories can be used in recommendation systems to understand underlying user interests by exploiting user-item interactions, which can be a powerful signal to perform this task. This study proposes a link prediction-based recommendation system combining graph representation learning algorithms and gradient boosting classifiers for transaction datasets. The proposed system generates a network where nodes correspond to users and items, and links represent their interactions. A use case scenario is examined on a credit card transaction dataset as a merchant prediction task that predicts the merchants where users can make purchases in the next month. Performances of common network embedding extraction techniques and classifier models are evaluated via various experiments conducted and based on these evaluations, a novel system is proposed, and a matrix factorization-based alternative recommendation method is compared with the proposed model. The proposed method has shown superior performance to the alternative method in terms of receiver operating characteristic curves, area under the curve, and mean average precision metrics. The use of transactional data for a recommendation system is found to be a powerful approach to making relevant recommendations.

The rapid growth of mobile payment and geo-aware systems as well as the resulting emergence of Big Data present opportunities to explore individual consuming patterns across space and time. Here we analyze a one-year transaction dataset of a leading commercial bank to understand to what extent customer mobility behavior and financial indicators can predict the use of a target product, namely the Individual Consumer Loan product. After data preprocessing, we generate 13 datasets covering different time intervals and feature groups, and test combinations of 3 feature selection methods and 10 classification algorithms to determine, for each dataset, the best feature selection method and the most influential features, and the best classification algorithm. We observe the importance of spatio-temporal mobility features and financial features, in addition to demography, in predicting the use of this exemplary product with high accuracy (AUC = 0.942). Finally, we analyze the classification results and report on most interesting customer characteristics and product usage implications. Our findings can be used to potentially increase the success rates of product recommendation systems.

Traditional financial decision systems (e.g. credit) had to rely on explicit individual traits like age, gender, job type, and marital status, while being oblivious to spatio-temporal mobility or the habits of the individual involved. Emerging trends in geo-aware and mobile payment systems, and the resulting "big data," present an opportunity to study human consumption patterns across space and time. Taking inspiration from animal behavior studies that have reported significant interconnections between animal spatio-temporal "foraging" behavior and their life outcomes, we analyzed a corpus of hundreds of thousands of human economic transactions and found that financial outcomes for individuals are intricately linked with their spatio-temporal traits like exploration, engagement, and elasticity. Such features yield models that are 30% to 49% better at predicting future financial difficulties than the comparable demographic models.