Roughly 5 years ago, when the idea was first floated that big data might help lenders make more accurate credit decisions, big data was also mostly though of in the context of obtaining additional data from social media, such as the widely popular Facebook where pretty much every individual on the planet has tons of information about. In fact, that’s where we started from as well in 2012 when we built the world’s first generic scorecard purely from Facebook data.
In the coming years, many competitors followed suit and credit scoring based on Facebook gained strong traction, especially in the non-bank lending sector.
As time passed and Facebook realized the size and value of the gold mine they are sitting on, they started to limit access to its user data and obtaining valuable information from the social network became more and more difficult. First, the way users managed their permissions changed, meaning that people became more aware of the amount and contents of the data the were sharing (a good development in our opinion as we are very much pro transparency and informed behavior).
However, Facebook took another serious step forward, amending its terms of service so that these days, it is explicitly stated that one shouldn’t “use data obtained from Facebook to make decisions about eligibility, including whether to approve or reject an application or how much interest to charge on a loan.” This made it virtually impossible for any respectable lender to even consider using Facebook data in credit scoring.
Luckily for our clients, such steps by Facebook (and similar steps from other social network platforms) were not a surprise and by the time the screws were tightened, we were already looking a lot further. There is so much more data out there these days about every individual on the planet that is both legally and technically accessible. Hence we encourage every lender to rethink their big data strategy that relied on social media in the past. Moreover, the scorecards we build on other data sources nowadays are even stronger than the ones based on Facebook data in the first place.
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