One of my favorite lines from “The Social Network” is an exchange between a lawyer and the actor portraying Mark Zuckerberg. The lawyer asks Zuckerberg what he’s doing and he replies that he’s checking in to see how things are going in Bosnia.
“Bosnia. They don’t have roads. But they have Facebook,” the lawyer says.
I am constantly amazed at what people put up online. Sharing the most mundane details of their lives for just about anyone with an internet connection to read. If I were an auto lender, I would be all over what my customers are doing.
Which brings me to my question for the day: Why shouldn’t lenders require their customers to become friends or followers when taking out an auto loan?
Every lender knows about the pitfalls of trying to collect via cell phones and text messages. Other than cell phones, the most ubiquitous tool out there for lenders today is social networks. People use Foursquare to check in to wherever they go. They share details about their comings and goings on Facebook. They post new job information on LinkedIn. They tell people where they will be later on Twitter. And unlike trying to contact people via cell phones, there do not appear to be any legal landmines to using social networks as a mechanism to help collect on debts.
But beyond using social networks as a debt collection tool, the most important value is likely to be the boost in customer retention that can be had by analyzing what a company’s customers are doing online. Think of all the valuable data that gets posted via an individual’s social networking activity. Lenders are going to have to comb through reams of data, but data is king.
Until the next big thing comes, social networking is the most important trend of the past 10 years. It is an untapped goldmine.
Lenders could try to make such a mutual friending mandatory, but enforcement would be very difficult. Trying to find an individual on Facebook with a fairly common name is the equivalent of productivity quicksand. To entice borrowers to join the program, lenders could offer some discount or incentive, like a lower interest rate. Over time, the program would just become standard for any new car purchase.
Debt collectors and skiptracers are increasingly turning to social networks to find delinquent debtors. Lenders should be more proactive, though, and connect with customers before the monthly payments stop showing up in the mail.
If Facebook can succeed in Bosnia, then there should be a way for financial institutions to maximize using Facebook here in the United States.
