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Posted by on Dec 17, 2011 in Market Conditions, Mortgage News | 9 comments | Print Print

Banks and Social Media

Hat tip to daytrip for sending this along, from

A new wave of startups is working on algorithms gathering data for banks from the web of associations on the internet known as “the social graph,” in which people are “nodes” connected to each other by “edges.” Banks are already using social media to befriend their customers, and increasingly, their customers’ friends. The specifics are still shaking out, but the gist is that eventually, social media will account for at least the tippy-top of the mountain of data banks keep on their customers.

“There is this concept of ‘birds of a feather flock together,’” said Ken Lin, CEO of the San Francisco-based credit scoring startup Credit Karma. “If you are a profitable customer for a bank, it suggests that a lot of your friends are going to be the same credit profile. So they’ll look through the social network and see if they can identify your friends online and then maybe they send more marketing to them. That definitely exists today.”

And in the last year or so, financial institutions have started exploring ways to use data from Facebook, Twitter and other networks to round out an individual borrower’s risk profile—although most entrepreneurs working on the problem say the technology is three to five years away from mainstream adoption.

“Credit score is a lagging indicator,” said Brett King, a tall, puffy Australian with white blond hair who is the founder of the online-only bank Movenbank and author of BANK 2.0: How Customer Behavior and Technology Will Change the Future of Financial Services. “At best, your credit score is about 60 days behind. What we’re trying to do is look for things that reflect the likelihood of a future default, rather than what’s happened in the past.”

Movenbank is an online bank in private alpha release that replaces plastic credit and debit cards with a mobile device such as an iPad or smartphone. Mr. King is a major proponent of the questionable young science of using social media to evaluate creditworthiness.

When it comes to online privacy, Mr. King subscribes to the Mark Zuckerberg school of thought: standards are evolving, and the world will be better for it. (As long as you’re connecting and sharing, only good things can happen to you!) “Our view of what ‘private’ is, is changing,” Mr. King said. “We make friends with people we barely know!”

He predicts that banks will soon start asking customers to verify their social media profiles. Not everyone has a social media presence, of course, so submitting your Twitter handle will first be pitched as a way to provide customer support or account alerts, which will later open the door for “more complex products,” Mr. King said.


  1. Another reason to cancel those Facebook and Twitter accounts….

    More interesting is the industry’s effort to ferret out your income ant type of employment and to make banking (not just lending) decisions on a combined profile. The rate you will be offered on your CD in the future may be based on a combined model that predicts both risk and profitability.

  2. Agreed one more reason to just say no to social media (but then I am over 60).

  3. “Somebody’s watching me”…….Rockwell

  4. Lyle, actually, the fastest growing group of users of social media is adults over 50 and for adults over 65, the growth rate is on fire.

    Overall, most users are still young adults under 30, but it won’t be long until older adults find social media just as indispensable.

    This usage patterns parallels the usage patterns for Internet and Web use in general that many researchers have observed.

  5. I started looking into what Facebook was and could do when you signed up with their “service”. I closed my account. And don’t get me started about “cloud” services.

  6. That article is pretty disturbing and leaves me feeling uneasy about how this data is used and what new ways marketers will dream up to exploit personal information going forward.

  7. Someday soon they’ll be doing the same thing with healthcare — examining your social media accounts to determine if you engage in an “unhealthy lifestyle”.

  8. LameBook allows millions of people to engage in a massive time suck while believing they are actually accomplishing something. Pure genius.

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