Last year, Facebook secured a patent on technology that enables social-media data to influence lending decisions. The move could one day allow banks to use information about the creditworthiness of an applicant’s Facebook friends to determine his or her own risk profile.
As an expert on social networks and new media, I find this development fascinating. My interest is not so much in the specific technology Facebook is developing—we can only speculate on the details right now—but in what the news represents for business growth.
Is it inherently good or bad for companies to use social media data to drive business decisions and profits? I argue that is neither; it is just complicated. For anyone wrestling with this issue—whether a business leader, regulator, consumer, or observer—I offer five points to keep in mind: