The Internet provides access to new sources and new types of information on potential bank customers, including through social media channels. News stories widely report that non-bank lenders are using information obtained from social media channels to determine the creditworthiness of potential customers. Even Fair Isaac Corp., the company that provides the credit scoring system most widely used by traditional banks, has reported that it is considering whether to incorporate social media data in its credit scoring system. Before incorporating the use of social media data into their underwriting criteria, banks and other financial institutions should be aware of how such social media data is currently used by their institution and should consider whether credit and compliance policies and procedures should be modified to address its use. Certain compliance issues related to a bank’s use of social media data in its business are identified in this briefing for consideration and potential action.
Special Edition: To the Point!
