Tracking customers

Government blocks 18 OTT platforms for obscene content following minister's warning --- Representational Photo

The fastest growing technology and its penetration into evensmall nature of day to day activities has revolutionized the communicationprocess. Among other things, it’s the emergence of social media channels whichhave facilitated even deaf and dumb to speak in real time. Precisely, socialmedia channels like Facebook, Twitter, LinkedIn etc are the credible sources ofknowing about the persons’ behavior, intent and reputation.

There is a significant rise in availability of data aboutthe persons on the internet platform. The data is captured while registering ononline portals, making purchases, downloading apps or signing up for readingmaterial. The availability of the huge data bank on online platform is a richresource to track individuals’ behaviour, intent and most importantly, theirfinancial well being.

   

In line with the nature of this column, let’s look at theuse of social media channels in the banking sector. To begin with, I am sharingan incredible story of the year 2005 when a recovery suit and publishing ofsummons in newspapers against an ‘untraceable’ loan defaulter and his guarantorfailed to recover amount locked in the bad account. However, it was the powerof internet which nailed the defaulter to repay the outstanding amount pendingagainst him.

The bank officer took route of internet  search engines and located the ‘untraceable’ defaulter employed with Microsoft Singapore as Sales Analyst. Similarly, the guarantor was also traced in Bangalore working in IBM as Sr. Architect IT.

In the first instance, both the defaulter and the guarantor denied to have taken any loan from the bank. But they immediately owned the liability when the bank officer revealed to explore the recovery of the outstanding loan amount from their current employers. Finally, the defaulter paid the outstanding loan amount.

Since 2005 we have witnessed emergence of powerful socialmedia tools driven by internet where everyone is keen to mark his/herfootprint. But the social media remains under-used for productive initiativesas it remains more confined to private use than the professional use.

In banking sector, use of social media can be professionalized by integrating it into the credit appraisal system of banks. Even it can become part of know your customer (KYC) process.

Notably, the increased influx of social media even in common man’s lives has created a significant data bank not only about them, but also about the people associated with them.

For example, It’s an era where young men are applying for a loan and we have a huge population of these young ones who are new-to-credit segment. Banks have been using traditional methods of assessment of the credit-worthiness of a person.

In traditional way, the credit footprint and strong credit history is must. So, the new-to-credit face lot of difficulties in getting their loans approved.

Since banks are pursuing their mission to expand theirreach, they have to come out of the traditional narrow criteria of assessingthe credit risk of loan applicants. Here they can lay hand on the social mediahandle of the applicants to measure their behavior and the circle in which theyare operating.

For this, the banks need to invoke powerful data analyticsand artificial intelligence tools to analyze persons’ social media activity tomeasure their lifestyle, as well as their income and spending patterns. Whilebrowsing the data of  prospectiveborrowers, their network of ‘friends’ can be analyzed in terms of their creditprofiles and the data can help the banks to take a credit decision.

It’s notable that the traditional credit scores and CIBILscores often leaves out a lot of individuals from the radar and many  even fail to get credible score despitehaving creditworthiness. So, it’s the social media handle which can be used asan alternate or parallel credit scoring model to gauge thecreditworthiness  of customers.

There may be banks and financial institutions using Internet to track social media behaviour to check credit-worthiness of their customers, but it is done as an unofficial activity.

The need is to let banks make use of social media as an official tool to assign a credit score to gauge the reputation as well as creditworthiness of their customers. Even defaulters can be chased and made to repay their loans. Once officially implemented, the banks would be able to get rid of negativity spread on social media against them to a large extent.

(The views are of the author and not that of the institution he works for)

Leave a Reply

Your email address will not be published. Required fields are marked *

five × three =