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Data Privacy and Lending

 

Lately, there have been 2 issues around the digital data privacy that have been doing rounds in the media –

  1. Facebook and Cambridge Analytica
  2. Indian Elections and Cambridge Analytica

Superficially they look like they are disconnected since one is a social platform and second is related to politics and voting. But a closer look tells us how Tech is influencing human behavior by using data collected from social networking platforms. As end users, everything we do over a social network such as clicking on articles that interest us, our likes and dislikes, smileys or gifs we use, page visits, etc., are stored and sold by the likes of Facebook. Such unfortunate events highlight how evolving information landscape interacts with technology.

Iterating back to Cambridge Analytica, now that they have closed their operations, are we safe? How does this impact FinTech? Is this kind of data use theft isolated to the USA or Europe? Are other countries not exposed to this risk? For those who have never heard of Cambridge Analytica, the core issue is Facebook sold data regarding users (such as demography, likes and dislikes, political leanings, articles read and others) to an analytics firm – Cambridge Analytica. This firm then engaged in data analysis for Political operations and recommended solutions to its clients to influence voting patterns in the 2014 US Elections.

Data Privacy & Lending

Financial data about users is widely available on many servers. This data when used in tandem with social data points (more commonly used by new age NBFC’s - in microloans, or new lenders) add value to existing underwriting guidelines. The use of such data need not always have a negative connotation, such tools enable lenders to maintain cleaner balance sheets and manage operations efficiently to keep costs and NPA’s low. These data points need to be balanced with clear rules regarding data ownership and privacy rights.

AI's Impact on Lending

Today with algorithms in Artificial Intelligence (AI), machines can read and interpret documents that are supplied in the loan process, they can translate and derive meanings from voice conversations, without losing context. Machines can continuously update and correct these algorithms. The rise of the Internet of Things, data ownership and privacy issues involving wearable devices, remote sensors, and smart homes will need to be addressed. Therefore, the AI is no longer restricted to predicting your vote, it is now influencing your choice of lenders, purchases, modes of payments, spend/earn sources are now easily available data points.

Data privacy benchmarks

General Data Protection Regulation (GDPR) is set to take effect on May 25, the regulations restrict what types of personal data the tech companies can collect, store and use across the EU. There are provisions, for the right to be forgotten, ask companies to remove certain online data about them,  require obtain parental consent in case the user is under 16,  before using popular digital services. If companies do not comply, they could face fines totaling 4 percent of their annual revenue.

In India, data privacy concerns are now gaining more traction than before. There have been ongoing deliberations of the expert committee on data protection, recently constituted by the Modi government, headed by Justice Srikrishna.

LendFoundry as a platform

Lending platforms have evolved now to use AI in assisting loaning or lending decisions after assessing the creditworthiness of borrowers.

At LendFoundry we have taken measures to ensure we respect the regional laws and uphold ourselves to the highest standards. The platform is designed to provide complete transparency to all parties involved in the lending process, with information tailored to meet their needs.

Some key features are

  • The ability the manage permissions as per roles, which is useful in maintaining the privacy of borrower documents, Personally Identifiable Information (PII) call logs, loan, and application information.
  • Data is stored in AWS, with data centers in USA and Mumbai
  • Data Encryption is applied in Transit and At Rest, providing all the necessary safeguards to your data, at all times
  • Ability to customize consents and terms and conditions.
  • May 24, 2018
Shubha Galgali
Shubha is Associate Product Manager at LendFoundry. She has over 13 years of experience in the financial services industry and currently working on making lending easier and faster with technology as an enabler. She can be reached at subha.g@sigmainfo.net

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