Visa Europe Collab and advanced big data and analytics company Hello Soda, have launched a new study assessing the value of social media data to financial services. The research reveals how online social footprints can be used to boost financial inclusion, detect fraud, enhance contactless and e-commerce and enable more targeted marketing.
The ‘Convergence of social media and financial data’ study, conducted by Hello Soda, Visa Europe Collab and Consult Hyperion, looked to identify the possibilities of utilising social media data to benefit both the consumer and business on a consent-only basis and explored the possibilities of how it could be used beyond validating a person’s identity.
By applying advanced data analytics, natural language processing, the big five personality traits and other psycholinguistic profiling techniques to people’s social media interactions, the study identified that these methods could create a new, effective way to verify consumer identity and widen access to financial products. ID verification through pioneering social data analytics is particularly revolutionary for some developing countries where large portions of the population have been excluded from traditional financial services or may not have official identity documents.
According to the study, social data driven services could also increase addressable markets for lenders through the introduction of alternative methods of risk assessment for individual borrowers. Implementation of this type of analysis could enable individuals who are not able to provide adequate assurance to lenders through traditional data sources such as credit checks. Individuals who could benefit include young people without a long-standing credit history who are struggling to buy their first home and foreign immigrants unable to transfer credit history between countries. These customers could now be able to access credit - potentially for the first time.
And when it comes to debt, the study found that by combining social data and financial history, consumers could actually be protected from over-spending. Information around planned expenditure, trends in financial consumption and upcoming expensive events such as birthdays or weddings are all available through the convergence of social and financial data and by integrating analysis of this information into banking and payment applications, real time preventative measures which protect consumer credit ratings and lower lending risks for banks could become a reality.
For a student with a loan that is due to last an academic term, social and financial data could combine to provide individuals with accurate real time monthly expenditure projections intervening with warning messages when spending behaviour is likely to be unsustainable.
The research also highlighted the possibility of preventing fraudulent financial transactions before they take place. For banks and e-commerce merchants the challenge is to accept as many good payments while avoiding fraudulent ones and with the use of social identity verification it’s possible they can authenticate transactions more accurately and enhance their existing fraud detection capabilities by tapping into social data.
In addition, the possibilities for greater and more accurate personalisation and targeted marketing campaigns were also identified in the research paper and, with the intelligent application of big data analytics, this could potentially increase engagement and up-take in financial services products and services. Currently, due to the vast amount of unwanted and irrelevant offers, the average click-through rate in the industry globally is just 3% but personalised and relevant targeting could see this significantly rise.
Commenting on the release of the study, Hello Soda CEO James Blake said: “We are excited to have conducted this ground-breaking study with VISA Europe Collab which reveals the far-reaching possibilities of big data in financial services and how it can positively impact both the consumer and businesses. The FinTech revolution is creating opportunities for the industry to innovate and take major steps forward when it comes to financial inclusion, ID verification, tackling fraud, debt management and more accurately targeting consumers with personalised offers instead of bombarding them with irrelevant ones.”
“An important role we play at Collab is providing thought leadership to our member banks and the wider payments ecosystem by examining emerging technologies and concepts” says Mike Philpotts, Innovation Partner at Visa Europe Collab. “Exploring the potential that social data has for making the payments world more inclusive, safer and better for consumers is very much aligned with Visa’s core values, and I’m delighted that we’ve been able to work together in order to articulate a vision of what the future could hold in this area.”