Banks might start checking your Facebook page
There’s a possibility that in the future we’re going to have to be a little bit more judicious when it comes to choosing which friend requests we accept. In 2012 The New York Observer published a report suggesting that smaller banking institutions have started using information posted on member’s social media accounts to determine whether or not they should be approved for a loan.
A lot of the information we publish on our social networks is available to anyone browsing the internet, so the fact that some lending institutions are already using the information is probably no surprise. What’s more interesting and probably an ethical question that’s worth asking ourselves is what this means and are we willing for banks to be thumbing through our social media accounts.
What sort of information would banks be looking to monitor?
The New York Observer article is focused around a lending institution called Lenddo, which uses a system that requires members to verify their online accounts by providing information from a social network like Facebook, Twitter or LinkedIn. Information from the account you choose is passed back to Lenddo which then uses an algorithm which determines whether someone is suitable for a loan.
The algorithms themselves are still a closely guarded secret but they’re essentially geared at determining how much of a credit risk you are for the bank. And if you’re using your social media account to verify this information essentially anything you’ve posted, liked or clicked could be used.
Why is this a problem?
Well, a big part of the problem with this system is that banks would be able to gain access to information that would normally be confidential and illegal to request and use this information as the basis of making their final decision on the loan. So there is the potential that some people may have their final loan application decisions based on prejudice rather than actual fact.
Another potential minefield would be if banks started leveraging your connections for targeted marketing. And if banks or financial institutions start posting on your Facebook wall if you’re behind payments there would be serious questions regarding the invasion of privacy.
What’s going to happen now?
Well, we suppose the next course of action remains to be seen. MasterCard has reportedly started mining big data from customer’s social media accounts and selling it to big banks. And it seems as though the mining of this big data is something that is going to be here to stay in all types of business from banking to telecommunications. While this varies from bank to bank, the most important thing to do would be to be careful what you post online and exercise caution.