Category: Recovery

Banks track defaulters with social media

8 Nov 2012, TNN.

CHENNAI: An innocuous update like ‘Mani was at Kodai Club’ on a social networking site could provide a host of information to a bank. Financial institutions have started using social media to check customer profiles, analyse tastes and preferences, assess credit worthiness, and even chase down defaulting borrowers.

“Banks use social media for lead generation, customer engagement and recovery. Some banks have turned to new collection vendors who have explicit skills in social media applications so that they can trace loan defaulters, especially on mortgages,” said CVG Prasad, chief information officer, ING Vysya Bank said.

Banks and recovery companies abroad have been using social analytics — deriving business insights and extracting data from user profiles — for a while. “In the west, social media is used to track customers with pending loans who may be untraceable,” said a senior official from Development Credit Bank. Posts and updates can provide early warning signals about a customer’s financial status.

While banks still rely on traditional sources such as Credit Information Bureau of India to get information on corporate and retail borrowers, they are also harnessing social media. They look to social media sites for insights into lending to small, local businesses such as restaurants and beauty salons.

Comments on blogs and social media sites on quality of service can be a reference point for bankers to decide whether to give a working capital loan or not. Banks are also using networking sites to track business activities of exporters. If the social footprint hasn’t changed much in a year, it could influence lending decisions.

“If an organisation receives lot of negative feedback on its products and services, it may have an impact on its ability to pay future obligations. So this data may be used as one of the parameters to assess credit worthiness of an organisation. Social media can provide useful data on employee and customer perception,” said S Ganesh, chief executive officer, D&B Analytics and Decision Services.

Not all financial institutions are supportive of social media tracking. “Anybody can hack and write something on your wall. Not all information is authentic,” said K Venkataraman, managing director and chief executive officer, Karur Vysya Bank said.

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