Could what you say in social media impact your credit rating?

Could what you say in social media impact your credit rating?

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Early in June a plan to mine and use data from social media by Germany’s largest credit rating organisation, SCHUFA, was leaked to the press. With more of us saying more things in social media, and building larger and more complicated social graphs, the opportunities for this social media data is growing day by day. Structuring and mining this data and these social graphs could be incredible valuable if done in the right way and for the right reasons.

The reports suggested that SCHUFA was planning to use data available publicly from Facebook, Twitter and other social networks to understand more about individuals and more general market trends. The reaction to these leaked reports has focused on the data privacy questions that it raises – should the agency be able to mine messages and data about people, even if they do choose to share them publicly? There are also questions about how useful conversations on social media might be.

But perhaps the most insightful observation comes from the Süddeutsche Zeitung:

The Internet is full of private information that is valuable for the business world. If SCHUFA doesn’t take advantage of it, sooner or later someone else will. Politicians will not be able to completely prevent it. Nobody should say that they haven’t been warned.

The privacy questions are real and need to be addressed but not necessarily in the way many commentators were suggesting. If people are actively choosing to share information publicly for all to see, they should expect that people will see and learn from this. But we are all, as consumers, still learning and developing our own understanding of what all this sharing means. We are becoming more nuanced and more intelligent in how we use social media, but even so we are not always thinking that what we say may be seen by others. Or, more critically, that it can be analysed in a structured manner.

But this potential experiment in Germany shows the value that some organisations are seeing in social data. Being able to understand social graphs – how people are connected to others and to the things that they like – is incredibly useful. Seeing and analysing what they actually say is equally so. Credit-rating agencies build their product on data analytics; on the understanding of the people they are reporting on. Social media potentially offers a useful way to add to this. Can you gain a better understanding of somebody’s risk profile if they dismiss a speeding ticket they just received? Can you learn more about them if you know what sports they Like and what places they visit.

By beginning to mine and analyse this data, any firm that could benefit from a better understanding of the customer will start to see the real opportunities there are to change products and services. And to target different people in different ways. The sensible firms are those already experimenting with social media data. Going beyond just listening for mentions of their brand and starting to use social to build real pictures of customers.

And over time, customers will become more aware that this is happening. The privacy questions being raised about SCHUFA in Germany are a reflection of the current change that is happening in consumer behaviour. We are all becoming more aware of what the things we share can be used for. We will become more nuanced in our sharing and in the data we allow others to see in the future. But as more of us share more information online, the potential for mining this data will only continue to grow.

Photo credit: The Facebook Like Stamp by Denis Dervisevic