Could Yelp Indicate Whether Your Business Deserves A Loan?
By: Deirdre Fernandes on September 4, 2016
Excerpt from Article:
Concerns over running afoul of regulatory requirements, especially on consumer loans such as mortgages, credit cards, and auto loans, have kept many banks from using social media searches for loan decisions.
Federal regulators have warned financial institutions that if they are relying on social media data to make credit decisions, they must ensure that they aren’t discriminating against borrowers. And social media companies that allow their data to be scraped for lending decisions could be more strictly regulated as credit-reporting agencies, the Federal Trade Commission has suggested.
Facebook last year limited access to its user data by third-party applications, in response to privacy concerns.
Banks and credit unions will likely start incorporating the new data from social media and other sources into their loan approval models, instead of abandoning their old ways entirely, said Dave Buerger, president of CuneXus Solutions Inc., a California-based technology company that is helping lenders, including Digital Federal Credit Union in Marlborough, introduce faster, online auto loans.
The company’s technology can incorporate social media and online information about a consumer into the loan review process, Buerger said.
But banks are still trying to determine whether these new data models will prove reliable in predicting whether a borrower will pay back a loan, especially during an economic downturn, he said.
“I think there will be an evolution,” he said. “Everybody is testing new things.”
The full article can be found here.