From acquiring leads to performing credit checks, banks are using social media in ways consumers least expect. According to a CII-PwC survey, 63 percent of respondents confirm that their bank uses social media to gain leads while 50 percent were honing in on social media aggregators to interpret data.
You may now be wondering what all this has to do with the average consumer and even more so with the average business owner. Not only are banks tapping social media platforms to garner new business, they are also exploring online pages and profiles in order to influence their lending decisions.
Lenders are more apt to extend their financial hand if your online profile is well-liked. If you’re a business in need of financial assistance, don’t be surprised to learn your bank has reviewed your online profile. Online reviews, especially for products and services, are now one of the first places lending institutions head to determine your creditworthiness.
Fadel N. Lawandy, assistant professor and director at Chapman University’s Hoag Center for Real Estate and Finance says, “Lenders (think), ‘Are they going to pay me back or not?’” Social media platforms have made answering this question a little easier with the existence of online business profiles.
Over the last decade, more and more companies are utilizing every aspect of the power of social media, and this includes how well their products and services are both perceived and received in the market. Lawandy explains, “if they’re appealing, then there is a high chance of the company being able to sell more products.” This appealing and potential increase in business of course, increases your businesses’ chances of gaining credit.
While not all banks take the social media route, alternative institutions and smaller financial firms that work with higher-risk businesses — those who’ve been denied credit by larger institutions, those with a lack of credit history and even those considered a small business – have applicants with fewer delinquencies and defaults when their social media ‘credit’ has been taken into consideration.
Anaheim-based American Finance Solutions is one company that takes a potential borrower’s online social standing into consideration, having issued more than 10,000 cash advances totaling more than $100 million. The company’s chief executive Scott Griest admits that when an applicant is being taken into consideration, everything from an applicant’s Facebook posts to their Google reviews, and any other relevant online media data, are looked at during the qualification stage.
Griest says that ideally, a borrower will have a good social media standing in that they have favorable consumer reviews and will openly address customer criticism. These types of characteristics display growth in the business, which inevitably, end up being less of a credit risk. He adds, “if on social media (customers give) five stars for a new chef and they need money for new marketing, then that’s good sign.”
Kabbage, an Atlanta-based online credit provider, has advanced more than $200 million to small businesses. They say once their clients are approved for funding they can link their social media accounts to their credit account for future references. If the company sees positive consumer interaction, clients can be offered continually increased credit.
Kabbage says that they have found a trend with their clients: businesses with strong social media customer relationships have 20 percent lower delinquency rates than companies who are not social media active.
About the Author: Stefanie Hartman is an International Speaker, Mentor and Marketing Your Expertise Consultant. She is the founder of the home study program http://www.StopTradingYourTimeForMoneyOnlineProgram.com that teaches people how to discover their expertise and redefine their life & income through specific monetization strategies. She is also the Host of the TV Show “Big Ideas-Bite Sized. There is Power in 15 Mins” For more info visit: http://www.stefaniehartman.com
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