Banking and Social Media

A new bank is set to launch later this year that will make use of social networking data to determine pricing and product offerings for its customers.

MovenBank Corp. Ltd. has sets its sights high. Set to launch later in 2012, it already plans to be the number one mobile banks for the so-called “smartphone age” where social media and social networking reigns supreme.

It should come as no surprise, then, that MovenBank fully intends to make good use of a customer’s social media information when embarking upon a new relationship. Accountholders can should expect their social media data to shape the types of products they are offered by MovenBank and their price structures.

“We look at a bunch of elements, and one is your ability to act as a referrer, or influencer, who can drive acquisition as a basis for connections,” said Brett King, who is not only the founder and chairman of MovenBank but the author of the book Bank 2.0, according to the online news source Collections & Credit Risk.

Heretofore banks have not utilized social media outlets such as Facebook and Twitter for much more than marketing attempts and experiments involving customer service. This is not to say, however, that financial institutions – and their product vendors – don’t recognize the potential that their customers’ social media data has in terms of influencing credit decisions, product pricing and even aiding debt collection.

While some believe that this type of information may help change the shape of banking in the future, it may not, in fact, be of much assistance to lenders in light of all of the recently mandated Federal regulations like the Fair Credit Reporting Act which limit the ways in which consumer data can be collected and shared.

Nonetheless, MovenBank fully intends to use information gleaned from Facebook, Twitter and other similar social networking sites to inform underwriting and pricing, with the additional hope that such information would help the bank to cultivate  long-term customer relationships by extending perks like better pricing for repeat customers. King has worked to develop a scoring product unique to MovenBank known as CRED, which combines traditional credit scoring elements with an individual’s social media and social networking “street credibility” to determine exactly what offers MovenBank will extend.
That means that with CRED, MovenBank will not only scrutinize a potential customer’s bill payment history, their tendency to make payments on time and whether or not they have ever defaulted on a debt but also their personal standing in the social media networking scene and evaluate their ability to inspire others to sign up for the bank.

“If you introduced 20 friends, we might add 25 basis points to a saving account, or offer free p-to-p transfers,” explained King, according to Collections & Credit Risk.