Skip to main content

Banks may soon scan Facebook and call records to see if you deserve a loan

If you think the NSA crawling through your call history and social media accounts is a frightening prospect, imagine a bank doing the same. That’s the idea behind emerging research and startups around credit monitoring, most with the goal of figuring out just how much online behavior tells about a person’s fiscal responsibility. Unfortunately, all the data is a lot more informative than you were probably hoping, reports TechDirt.

Scary as it sounds, deriving metrics like a credit score from behavioral data could be attractive for both parties involved.

Recommended Videos

Daniel Björkegren, an economist at Brown University in Providence, Rhode Island, endeavored to predict how likely someone was to pay back a loan based on call metadata. In results presented at the NetMob conference in Cambridge, Massachusetts earlier this month, he analyzed the records of 3,000 borrowers from a bank in Haiti — who they called, for how long, and how much money they spent. After applying an algorithm, Björkegren found the bank could’ve reduced defaults by 43 percent if it’d taken his approach to selecting trustworthy applicants.

How’d he figure? Information like phone metadata can be easily extrapolated. Prompt bill payers are typically more reliable than those who hold off, and people who make frequent calls far outside a bank’s network are more likely to have trouble making deposits. However, even the esoteric information can factor in — researchers at Cignifi, a Cambridge-based firm studying the predictive capabilities of mobile data on loan repayment and savings, found that the time of day and neighborhoods from which calls are placed can be indicators, too.

Two startups, Inventure and Lenddo, are shopping the idea of “data mining for credit” to lenders. As part of a pilot in South Africa last year, Inventure gave smartphones to a small group of people and collected phone and demographic data as they paid the company back. Lenddo — which monitors interactions, connections, and activity on social networks– already conducts business in the Philippines and Colombia.

Think the implications are worrisome? You’re definitely not alone, but there’s an argument to be made in favor of companies like Lenddo. Kyle Mead, innovation director of credit-scoring company Entrepreneurial Finance Lab (EFL), told New Scientist about his experience trying to get a loan after moving to the U.S. from Canada. “I had no debt, no previous information on me in the U.S.,” he said. “The highest I was offered was $300, because I’m credit thin.”

“I had no debt, no previous information on me in the U.S. The highest I was offered was $300.”

Millions of people in developing countries are in the same boat. They lack any kind of financial history, making institutions hesitant to lend. That’s where behavioral monitoring services can really come in handy — Lenddo has been used to approve loans for “phones and motorcycles,” said a spokesperson.

Scary as it sounds, the idea of deriving metrics like a credit score from behavioral data is an attractive one for both parties involved — banks get better snapshots of customers, and first-time borrowers encounter way less resistance than they otherwise would. The process may be invasive, but as our dependence on Internet-connected devices grows, it’s only likely to become more pervasive.

Next time you apply for a loan, just read the fine print carefully. Very, very carefully.

Kyle Wiggers
Former Digital Trends Contributor
Kyle Wiggers is a writer, Web designer, and podcaster with an acute interest in all things tech. When not reviewing gadgets…
WhatsApp will soon let you send money with Facebook Pay
whatsapp facebook pay brazil rollout

WhatsApp could soon be a platform for sending money as well as messages.

On Monday, WhatsApp began rolling out payments in Brazil, the first country in what is expected to be a wider roll-out of the feature.

Read more
Threads adds new bio feature that trumps X
A person using the Threads app on the OnePlus 13.

What's better than one link in your bio? Two? How about three? Threads is now allowing users to add multiple links to their bios, outnumbering the amount of links X, formerly Twitter, allows people to add to their own profiles.

Meta announced the new feature to Threads in a press release on Thursday, saying users will be able to add up to five links onto their bio. For content creators, this means they can add links to their podcasts, YouTube channels, Twitch channels, TikTok page, newsletters, articles, and more so that their followers can engage with their content outside of Threads.

Read more
TikTok has an ancient solution for kids hooked to screens at night
Breathing exercise on TikTok.

TikTok has long been at the center of a storm for getting children stuck in a digital addiction loop, eating up their sleep hours, and exposing them to harmful material. The company has repeatedly had to address those concerns in Senate hearings, too.

Now, the troubled short video platform has a rather ancient solution to fix usage concerns for children and teens. The company has today introduced guided meditations, tagging alongside wind-down prompts. The exercises will be available to all users, but will be enabled by default for all users under 18 years of age.

Read more