Social media and your loan application

The socialisation of the financial industry: Why banks care what you "like".

Social media has come a long way from Friend Reunited and Myspace. With the online social world exploding in the early- to mid-2000s, it wasn’t long before social media went from occasional chats with friends to multi-faceted experiences encompassing all your social worlds.

Myspace was the first major social media platform to launch in 2003, giving users the opportunity to build personalised profiles and connect with friends. The introduction of LinkedIn the same year incorporated users’ professional life, while 2004 saw the launch of social networking service Facebook. By 2008, Facebook had overtaken Myspace in terms of the number of active users worldwide.

YouTube was created in 2005 and quickly became the go-to platform for video content, while Twitter, now known as X, was launched the following year in 2006.

But what about the banks? They might have their own social media accounts, and they might regularly post on these accounts, but they pale in comparison to companies of similar size in other global industries.

A changing market

When it comes to banking, many believe that change will come from outside the industry. Around the world, startups offering small loans and credit products are entering the market and using more data than traditional banks to evaluate their applicants.

LenddoEFL, based in Singapore, focuses on emerging economies and takes alternative data sets, including social media, to help build credit-risk models for areas of the markets without traditional credit bureau scores. Anyone who is online or carries a mobile phone shares information whenever they interact on their device. LenddoEFL says this information can be analysed to better understand who these customers are and their creditworthiness. In turn, this can help those with no credit history to get access to funds.

Meanwhile, Commonwealth Bank, among the top 4 banks in Australia, has also moved into the social media space by offering customers the ability to transfer funds to Facebook friends using its banking app.

What data is there?

There is a wealth of data at the financial industry’s fingertips just waiting to be mined. The notion of “big data” is relatively new. For the financial industry, big data means any information available about their customers on the internet that can be usefully analysed — and that means anything.

Facebook friends, search history, how you interact with your social network, the expanse of that network and whether there is even a trace of you online — everything and anything available can be used to form a picture of who you are and whether you are a reliable borrower.

But while the data is there, not many banks are taking advantage of it. Some mainly rely on it for customer service and marketing purposes. But looking at what some lenders have already done with big data, this is hardly scratching the surface.

The technology at the forefront

Here are some of the innovations we’re seeing with social media analytics in the financial sector.


There have been predictions of Facebook’s demise since its launch, with commentators anticipating the fall much in the same way as its predecessors, Myspace or Friendster. A key reason it has remained is diversification.

Examples include its incorporation of advertising, the focus on promoted posts and the ability to make purchases directly through Facebook.
In the finance sector, Facebook secured a patent in 2015 that would give creditors access to users’ social profiles to assess them for a loan.

The patent was acquired from Friendster, one of the first social networks in the early 2000s. It covers a tool that would allow lenders to reject an application based on your friends list. More specifically, your friends’ credit scores would be examined, and if the average score didn’t meet the standard, your application would be rejected.

While this hasn’t yet been implemented, this kind of approach might drastically alter your behaviour. You might be more reluctant to “friend” that person you met in a nightclub if you know your ability to borrow money will be impacted.

Temenos (formerly Avoka)

Since being founded in 1993, Temenos has been on a mission to revolutionise banking and change the way people apply for loans, credit cards, insurance and other financial products. A key part of that strategy is to use data sources to make the process more reliable, and social media is a major element in that plan.

By giving users the option of auto-filling loans and other credit applications, financial institutions can decrease abandonment. The demonstration in the video below shows a credit card application completed in 90 seconds, with employment information pre-filled using LinkedIn and Yodlee automatically sending bank transactions through to the lender. If banks adopt this, application processes could be greatly improved.


Chinese tech giant Tencent is aiming to change the way Chinese consumers are assessed for credit. In 2020, it launched a credit-scoring system based on what consumers buy over its messaging app WeChat, enabling it to offer credit services on its platform. Scores are calculated using artificial intelligence (AI) and look at users’ payment behaviour and credit history on the platform to determine their trustworthiness. As Tencent is also one of the largest gaming companies in the world, the software also applies to online gamers.

Social Lender

Nigeria’s Social Lender is a digital financial service solution that carries out a social audit of users on social media platforms and gives each user a Social Reputation Score. Once this audit has been carried out and a score given, users could be approved for a loan. If successful, funds can be transferred within 10 minutes. To use the service, customers must connect via Facebook, X (Twitter) or LinkedIn.

Payday loans

The bottom line: So is it good or bad?

The socialisation of the financial industry is still in its early stages, and the full implications remain to be seen. There have been early grumblings from both sides of the fence, with talk of prejudices relating to race or sexual orientation being unfairly used in credit decisions. More positively, the wealth of data available could give more deserving people access to credit.

However, in the UK, there is currently more focus on Open Banking as a means to help assess creditworthiness. This enables third-party financial service providers to securely access customers’ banking, transaction and other financial data from banks and financial institutions, as long as customers have given their permission first.

Some fintechs are already using Open Banking as a way to assess how creditworthy an applicant is rather than focusing solely on their credit rating. By doing so, they can look at consumers’ bank accounts and get an overview of their financial behaviour, including spending habits. Keebo, The Credit Thing and Yonder are some of the credit card providers who have used Open Banking in this way, with the aim of helping those who have been turned away by traditional banks get access to credit.

In the past, it has been about moving forward to avoid being left behind. Given the current pace of technological change, banks need to be at the forefront so they’re not trampled by startups.

Finder survey: Should lenders be allowed to evaluate social media activity when considering somebody's loan application?

Response% of respondents
Source: Finder survey by Finder of Finder members
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Written by

Rachel Wait

Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time. See full profile

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