Are banks assessing your creditworthiness based on your social media profiles?

GigaOm has an interesting article titled “New breed of lenders use Facebook and Twitter data to judge borrowers” which looks at a growing trend in financial services industries. Banks and other lenders are starting to look at customers’ social media profiles when assessing their needs and the risks they may pose as debtors. An emerging South African consumer protection framework could support extension of this behaviour to South Africa, if it hasn’t already been adopted.

At first glance this may seem somewhat outrageous (and it reminds me of the prospect of insurers using similar data to assess and modify premiums for insurance cover) but this sort of behaviour could well be supported by new consumer protection frameworks being adopted in South Africa.

The Treating Customers Fairly framework is in the process of being adopted by South African financial institutions:

is an outcomes based regulatory and supervisory approach designed to ensure that specific, clearly articulated fairness outcomes for financial services consumers are delivered by regulated financial firms.

Participating firms are required to show they deliver six outcomes which include these two:

  • Products & services marketed and sold in the retail market are designed to meet the needs of identified customer groups and are targeted accordingly; and
  • Where advice is given, it is suitable and takes account of customer circumstances

These two criteria could well lend support for a similar practice of analysing customers’ social media profiles and streams when assessing customers’ needs and risks under the guise of improved compliance with Treating Customers Fairly.

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