Hyderabad: Are you in the habit of posting every little detail of your life on social media? Next time, when you apply for a loan, this may impact your chances of getting it. Your posts, likes and comments, updates about your holiday trip, selfies and family pictures, your take on controversial subjects will come into play to mark you as worthy, risky or not worthy at all for the loan.
Many new generation lending institutions, which operate online, look at your social media posts while deciding on the loan. If marked as risky, prospective borrowers will get the loan but at a higher rate of interest. On the other hand, if there is a positive rating, the interest comes down too.
According to Keerthi Kumar Jain, Founder and Chief executive Officer of Anytimeloan.in, a T-hub incubated P2P NBFC, the company takes multiple data points into consideration while giving a loan. And that includes digging into the social posts too. “We take consent of the prospective customers to mine the data,” he said. The company does not exclude those who do are not on social media.
Data says it all
The digital footprint tells the lenders about family ties, friends, influencers, travel ideas, hobbies and interests. Trivial details like preferences for taxi services, self-drive cars or public transport facilities are also taken into account. These data points give lenders an idea about earnings, liabilities and spending and also about the possible use of the new loan they are seeking, says Kumar.
“We use machine learning for profile filters to arrive at a decision to lend or not lend. If we decide to lend, then at what cost,” he says. The company has created Lobot — a loan extending bot. It has over 1,000 questions and asks randomly. “We do not give a loan based on just one parameter,” he says.
The use of social media like Facebook and Linkedin has been on the rise for the past to two years. “So, the data insights may not be comprehensive. Also, there will be some who create a social profile to look good,” says Kumar.
Use of words like cash, urgent, emergency, salary will get flagged by the system and can reject the loans or give them at a higher rate. The system also filters anti-social comments. That the loan approval rate is just 22 per cent tells that the screening is rigorous. His company gives loans ranging from Rs 1,000 to Rs 10 lakh at 1.5 per cent to 4.5 per cent per month rate of interest.
According to Vinay, co-founder and chief operating officer of Faircent, social media posts help in knowing persons better but is not a comprehensive data provider. The company also looks at apps. “If someone goes on a morning walk, it is an indication that he takes care of himself and is disciplined. This is positive from lenders perspective and such customers stand to get higher loans, lower interest rates or both,” he says.
Its system can also read financial data, bank account details, credit card transactions. It deciphers spending and consumption patterns. Closeness to family is a positive. However, influential people on the friend list can be a negative.
“In some cases, the borrowers are given a questionnaire to collect psychometric data. The responses to these will give an idea about the mindset to repay,” says Vinay adding that social media data is of no use unless matched with a primary data. Hyderabad accounts for 7 per cent of its total lender and borrowers. The loan size is Rs 5,000 to Rs 5 lakh. It is looking to offer recharge loans of Rs 500.
Lendenclub another platform seeks demographics, family and professional details and not just the social media activity. All these account for 40% weight. The Cibil score account for another 15 to 20 per cent. Behaviour patterns are key. “If somebody behaves like a rebel, they are potential defaulters and need to be handled differently,” says Bhavin Patel, its co-founder.
Patel, however, says social posts lack depth and cannot be the sole basis of a decision. “Some profiles are amazing, but it is optional for the borrowers to give social media pointers. We do not insist,” he says.