In my opinion, banks that are enabling or attempting to enable transactions via a Facebook app are barking up the wrong tree. I’ve seen nothing to suggest that customers want this or would even use this. In fact, I’ve seen evidence of the contrary.[From Celent Banking Blog » Are Bank Facebook Apps the Future of Digital Banking?]
That’s not to say, of course, that Facebook is irrelevant to banks. For one thing, as I’ve bored on about at length before, if there were a transactional element to social media integration then banks might have some really good products and services to offer in that space.
I don’t want to be friends with my bank—after all, I’m a typical consumer so I hate banks—but I do want to be friends with my bank account.[From Friends and relations]
But that’s by the by. KPMG make a very interesting point on page 16, where they note that the lack of security infrastructure means that banks in any case have no way of knowing whether social media data comes from real customers, competitors, corporate saboteurs, mischievous hackers, agents of foreign powers or dogbots. This, it seems to me, opens up an interesting and immediate route for exploring the bank/Facebook boundary to find value. I was thinking that while the bank doesn’t know if you are a person or a dogbot e-mailing them or tweeting about them, and they can’tt use CAPTCHAs or similar to find out, they might be able to find out if you are human if they began exploring your social graph. Which leads on to the obvious further thought that using customers’ social graphs as an adjunct to conventional credit references and other cardboard-era identity management might deliver some interesting results.
He submits his information to the online-only PotterBank.com, but halfway through the application process, the website asks for his Facebook login. Then his Twitter. Then LinkedIn… 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.”[From As Banks Start Nosing Around Facebook and Twitter, the Wrong Friends Might Just Sink Your Credit | Betabeat — News, gossip and intel from Silicon Alley 2.0.]
Suppose that this works. Then it has security benefits because the social graph ought to prove much more difficult to forge that a photocopy of a gas bill — the gold standard for authentication in the UK — and, some people suspect, it may have additional benefits because the social graph could be more accurate than a conventional credit reference agency when it comes to deciding whether you want someone as a customer or not.
Brett King, CEO of Movenbank, has a radical idea: a “credit score” built — at least in part — on consumers’ social media activity. Sound crazy? Maybe, but the idea has attracted the attention of big league investors who just pumped $2.41 million into King’s startup.[From Is The World Ready For Social Media Credit Scores? | The Financial Brand: Marketing Insights for Banks & Credit Unions]
Brett is on to something. Whether his “CRED” score and algorithm is correct or not I couldn’t say, but the core of the idea — that if your Facebook friends are bank robbers, you might well be more likely to turn out to be a bank robber — seems wholly plausible. The social graph might be a better predictor of future activity (and future financial services requirements) than past credit scores. The social graph can tell things about you — like you’re going on holiday or getting married or moving to Hong Kong — that an intelligent and customer-centric organisation can act on in a supportive win-win framework. In Christophe Langlois‘ “A practical guide to social media in financial services” he talks about “Know Your Followers” (KYF) as the social media equivalent of “Know Your Customer” (KYC) in compliance. Obviously, KYF isn’t yet a legal requirement, but you get the idea. If organisations develop tools, algorithms and techniques for exploring the social graph then they might find that social media identity, or some kind of social media-based financial services identity, is far better than traditional KYC, credit agencies and old utility bills and predicting which customers they do or do not want.
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Consult Hyperion or any of its clients or suppliers
This is great in theory, but I see two hurdles.
1. Social Media sites do little to verify identities of people, especially Twitter which is rampant with twitspam.
2. The longer term issue is how criminals will use social media to ‘game’ the system. This will come in part from 1. and in part from creation of new and fake identities with credibly linked followers.
Now the argument might be that FI algorithms supported by individuals managing their own identities online will counter those hurdles. This will depend to some extent on peoples willingness to give up the ‘friends and family’ use of facebook for more serious establishment of credibility.
And, so if I want to up my credit score, I should ditch all friends that maybe have gone done the wrong route? And be really careful who I befriend? The richer and more influential and maybe even popular my friends are the better? Nah, I remain a skeptic …
> I cannot imagine any circumstances under which I would to earn “thank you points” on Facebook from my bank in return for the amount of money I have on deposit with them.<
And yet people do, or Amex Serve where cardholders earn Farmville cash rather than cashback, wouldn’t work. If as a customer, you are earning ‘fun’ rather than interest from your bank (fun being the currency of gamification, which is what this appears to be), then maybe the bank does become your friend because friends are (in part at least) for fun. Or at the very least, your frenemy.