Today, everybody has a strong social media presence, no matter if your an individual or a business entity. Even though the social media platform has been subjected to a lot of criticism for invasion of privacy, it has served as a valid medium for revealing insights into a company’s intentions and legitimacy.

This data is used by several companies to assess customer behaviour. Even banks and fintech companies are taking advantage of this incredible medium for data to validate the authenticity of a loan applicant. A well-maintained social media profile can actually be a smart way to procure small business loans.

Whether your customers are young personal loan seekers who have no previous credit history and hence would also not have a lucrative credit score, or a start-up that is seeking a business loan to grow their business, social media can be a viable platform to access valuable and confidential information about your applicants.

How You Can Use A Loan Applicant’s Social Media Profile To Assess Their Credibility

Here’s how social media can serve as a data point for assessing your loan applicants:

1. Verifying the Information Provided

Basic information like the physical address along with the name of the business or individual can be cross verified with the actual information that is provided by the applicant. If the information does not seem to be consistent across all social media platforms, it can raise suspicion and be subjected to more scrutiny to validate the information.

2. Duration of Social Media Presence

The duration and the foothold of a business can be quickly assessed by looking at the social media page of the business. Pointers like how many followers, likes and reviews they have can help to assess the positive impact of the business. The longer the age of the business social sites, the higher the aggregation of data that can be utilised to assess the brand and its products and services.

3. The Posts

The next thing you can check are the individual posts on the social media page. What kind of posts are published on the platform, how frequently are they done, and what are the reactions to these posts? This information can be used positively or negatively to assess if the business has been marketing their products effectively.

The posts should not be solely used for driving purchases and sales. They should also be used to share valuable information, encourage learning, convey greetings during festivals, discuss trending topics, etc. A good combination of such posts is a telltale sign that the business is using the platform to genuinely build a connect with their customers and have long-term plans for the business.

4. The Followers

Along with the posts, checking the quality and quantity of followers or connections of the business page is important. The number of followers on social media signifies whether end customers really like the product and help to assess whether the business has a chance of success.

5. Ratings, Reviews and Testimonials

Checking the ratings and previous reviews of the business is something which we all do before we buy a product or avail a service. The same goes for validating a loan application. How has the online reputation of the business been so far?

Bad comments and reviews are not just harmful to the business but also for the business loan application. Going through the social media reviews of the business will convey the success and the overall journey of the business so far.

6. The Frequency of the Response

Social media platforms help to connect and engage with the audience by getting your story across in an appealing manner. By looking at the response of the posts, comments and likes, you can gauge whether the business is really all out for connecting with the audience and converting them as customers.

It shows how well the business is interacting with their audience and making an effort to maintain a positive customer relationship. Checking if the business has responded to individual comments and accounted for all customer feedback is a great way of knowing if the business truly cares towards the needs of their customers. An unresponsive social media footprint shows an irresponsible business that does not value its customers.

7. Determining Terms for Online Loans

There is a strong relationship between customers who are active and responsive on social media, turning out as good customers. This is a fundamental sign of a good and thriving business that will do even better over time and so be able to repay on time.

The information on social media platforms can help to determine the terms of the loan by personalising the loans with special interest rates for that particular customer.

8. Useful for Loan Origination and Customer Acquisition

Data in social media pages can indeed be a starting point to acquire new customers. When several businesses use it to attract customers, why not use social media data to acquire new customers who might need loans to meet their capital demands?

As a fintech company, you can start your own social media page and market your campaign to acquire prospective customers and businesses to avail loans from your institution.

Else, you can surf the social media pages to look for prospective customers who are doing good and enhance their position by providing them loans.

9. The Five C’s

Traditionally, in the lending industry, the primary attributes that lenders often look for are the Five C’s – Character, Capacity, Capital, Collateral and Conditions. All of this can be informally assessed by using data from the social media pages.

By going through information of a business page or an individual page, you can understand their

• Character – on a personal basis.
• Capacity – know their trustworthiness or capacity and ability to repay the loan.
• Capital – money the borrower has already invested.
• Collateral – physical assets that can guarantee the loan if the borrower can repay it.
• Conditions – understand the overall competition and economy of the business position.

Even though social media is a relatively small consideration for companies who make business or individual loan decisions, it is a significant data point that should not be overlooked. Use social media to your advantage and leverage the power of data from gaining insights that otherwise will not be possible.

Rather than relying on factual information presented by the business or individual, why not take a step further and assess the actual and real time information available in social media pages. In this digital world, it’s time to go beyond assessing the creditworthiness by just looking at the credit scores.

For new businesses and consumers who don’t have a previous credit history, social media can serve as a tremendous platform to gather data and decipher the real picture.

Build your own credit assessment algorithm by using Finezza’s loan management software to power your lending decisions. Get in touch with us to know more about how you can use social media to make smart loan decisions.