5 April 2018
As one of the UK's leading online payday loan providers, 247Moneybox.com have tech front and centre in their business model. As a result, the company is well placed to comment on the use of social media in credit decisioning and the debate around privacy and oversharing.
The use of social media has long been a contentious issue. Platforms have been voracious in attracting new users and getting them to create content and share personal data however, the age-old question of how to monetise that data has led to issues. Most, if not all, revenue is generated from marketing and market research type activities. To date this has been begrudgingly accepted by the user base but over time become less of an issue so much so that some of the largest companies in the world have been created off the back of it. But the question stands; are we ok with this?
At the centre of the current storm of social media sharing is the topic of micro-profiling and the misuse of data. Misuse being the operative word as it would seem from press reports about the topic that data, originally collected in the form of a survey in a seemingly benign app was siphoned off to be used by an electoral consultancy firm to target specific users with profiled messages to influence their voting preferences. Unsurprisingly people are pretty annoyed to say the least with the UK parliament calling the CEO of the affected social network to appear before a committee of MPs to explain his firm's error.
What does this have to do with credit? Well the use of social media data in credit profiling and scoring has long been a goal of tech focused lenders. The goal leverages completely the fact that users share data willingly freely and frequently. The pitch is that if enough users share enough of their data then natural language processing along with a few algorithms will enable life events, attitudes and spending patterns to be tracked and projected to enhance the credit decision. Does it work? Well that's the question isn't it. As a standalone scoring methodology, it's questionable for a broad spectrum of the UK population. It may well have merit as an additional tool or for certain focused sections of a lending population, such as a millennial population, however this is a pretty powerful limitation of scope.
There may be more of a case where traditional scoring techniques and databases just don't exist or are not of the right quality or depth. For example, a newly arrived migrant who has not had a chance to build a UK credit profile would most likely find it hard to be approved. There may also be a case in countries where there is no centralised repository of credit information as is the case in much of the developing world. Here we may see great strides in the application of social media scoring. One only has to look to China for plenty of examples. However, it all comes back to the concept of sharing.
The propensity to share personal information ebbs and flows. Perhaps the millennial generation really embraced social media and bought into the non-corporate pitch but will future generations? Has the backlash started? Perhaps. However, these giant firms are not likely to take that lying down. Armies of behavioural psychologists are putting their academic musings to the test designing ever increasingly appetising hooks to get us to share data (and click on ads).
This brings us neatly to the word in the title "oversharing". What may be one user's concept of sharing might be another's oversharing. Fine, you would expect that variation to follow a normal distribution however what about one generation versus another? What happens if the generation that follows the millennial (not sure of the collective noun) has a normal distribution where the middle is dramatically shifted towards not sharing? We may be even seeing this within the millennial generation with the rise of certain networks over others. Newer picture focused networks seem to be combining the most addictive bits of social media sites that have come before, appealing to the celebrity and non-celebrity user alike.
It was interesting to note the comments of a number of tech and social media VIPs about banning their own kids from using social media. One does need to be a genius to read between the lines there. Will social media become the new cigarette? Dangerously addictive and damaging to your health? Remember the early cigarette ads promoting so called health benefits? Is that akin to the social networks claiming they help give a voice to the masses? All speculation but as the old saying goes history has a funny way of repeating.