Let me get this straight. Allied Irish Bank (AIB) is under fire because they told loan applicants that they may review their public social media account information in the process of determining loan-suitability?
This Finextra report says: “while AIB is not the only bank to monitor social media, not all lenders have a similar consent clause in their credit applications.” So, other banks monitor social media but don’t tell users about it. On face value, the implication here is that that’s somehow better?
Under the new data protection rules (GDPR) all organisations who collect data from people in the EU are required to fully disclose exactly what data they’re collecting, where they’re getting it from and how it will be used. The beauty of GDPR is that it will give the general public a much better understanding of how companies use and deal with their data. Companies will be obligated to create better services in order for people to allow the collection and use of their data.
The importance of the internet can be argued to back the notion that internet access should be a human right. Read about why many are fighting so hard to keep landmark net neutrality rules in place in the US right now. Free flow of information is important to our democracy and has helped form our modern world.
Access to social media, a place where you can post pictures of your cat and click like on party pictures from your friends, is, I would argue, not so much of a human right. Even if you think it should be, consider that this information by its very nature is public. This is unless, of course, you choose to make it “sort of” private to the extent possible on these commercially driven networks you are enjoying for free in exchange for ads and information sharing. When you share data on these public sites, it’s like putting up a poster on the street corner and expecting others to avoid looking at your content.
In order for the banks to more safely assess the risks (for them and for the borrower) of lending, why shouldn’t they be able to see top line details of your public social media activity? Public is the key word here. They’re not reading your private messages. Anyway, they’re also governed by some strict rules put in place by the likes of Facebook about exactly how they can use the data they find. Check out this blog post from Big Data Scoring about these rules.
Banks are in the business of lending out money. They give people access to funds on the promise that people will be able to pay it back. A borrower not being able to or not paying the loan bank is a risk that the bank has to endure. This risk in mitigated in part in the form of interest and fees. Put simply, if you default on your loan, the rest pay for you.
Just like with insurance, you don’t want to pay extra for others, unless it’s deemed fair and they would pay for you. This is a system built on trust and respect in order to fuel our finance-driven need for things we can’t afford without a loan.
If you behave like a crazy person and start putting up posters advertising your belief that “the end is nigh” or decide to borrow a line of credit to throw parties all day, every day, do you think your friends would lend you money if you asked?
Banks have a duty to their own business, shareholders and clients to do what they can to ensure they keep losses to a minimum. Part of this duty involves scrutinising potential borrowers. If that entails using publically accessible information from the internet whilst following regulated practice, isn’t this just common sense?
The future is powered by data, just like it always has been in matters of credit analysis. The only difference is that nowadays the data is a lot richer and easier to collect in vast amounts. It enables organisations to gather an ever more accurate picture of who you are and what you do. This means that marketers are able to send us tailored offers (like a push-notification for a discount on summer clothes when the weather warms up where you live) and more accurately determine whether you’re a good candidate for a loan.
If your public feeds show that you’re engaging in activities that will limit your ability to safely pay off a loan it’s not the information that’s the problem – it’s your activities. Watch ‘The Big Short’ for an entertaining overview of the potential longer-term consequences when banks lend without a safe level of due-diligence.
So, in response to the claims that the bank – in this case, AIB – is inappropriately “spying” on their customers, I say this: they are simply doing their job – smarter and cheaper than before.
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