Assessing credit risk has never been easier for the companies ever since they had recognized the capabilities that big data has to offer. This has resulted in a huge growth in the online consumer lending industry, where more fintech startups are able to assess credit risk more accurately; and subsequently, drive the concept of financial inclusion to new dimensions.
The online consumer lending industry is not without its flaws. Firstly, regulators are worried about the proliferation of unqualified borrowers and abusive collection practices in the industry. Secondly, there are reportedly cases of data privacy breaches within the loan platforms.
For the latter, under most circumstances, the loan platforms are not selling data as their main business. Instead, the main culprits of the data leaks are the employees who manage the data for the loan platforms. These employees resort to selling data illegally to supplement their income.
However, organisations too, are to be blamed for these circumstances. Let alone the questionable organizational culture that they promote in their employees; their operational compliance is weak too. While directors will claim that they are legally compliant, very little monitoring efforts have been spent on ensuring that the employees abide to the ethics and rules expected of them. For this reason, some of these employees are able to easily sell off their customers’ data for their own personal gain.
To make matters worse, some loan apps take advantage of the expansive terms and conditions to make the sale of the customer’s data legal. Users who reject the terms and conditions are often prohibited access to the apps unless the user grants the app access to contacts, location, stored files and other data – hence making the apps unusable. Such insistence from these companies that the users accept their ludicrous terms and conditions in order to gain access to these apps have place the users at a disadvantage.
So, what can we learn from the complications that will arise in the consumer lending industry?
Firstly, the companies ought to emphasise to its employees the importance of being operationally compliant. This is accomplished by implementing a satisfactory work culture where compliance will be rewarded and violations are punished. Monitoring efforts also ought to be consistent and sufficient so that it is harder for employees to leak data behind the company’s back.
Secondly, the government should step in and see how it can further protect the customers’ data. For a start, the government can look into the companies’ ludicrous terms and conditions and come up with solutions to ensure that the companies do not get away so readily with selling the customers’ data “legally”. In this case, the government should set a clear standard of how fair and transparent these terms and conditions are to be. This can be accomplished by stricter regulations and highlighting the customers’ rights in digital privacy. In doing so, the customers will be more closely guarded against companies that exploit their ludicrous terms and conditions to wrestle control over the customers’ data from the customers.
As for the South-East Asian countries, there has never been a right time for online consumer lending platforms to step in and close the gap between the poor and the rest of the country. These people have high expectations and hopes that the financial inclusion opportunities that these startups offer will pull them out of the poverty state. At the same time, unscrupulous companies and employees alike seek to acquire these people’s data through deceitful means to fulfil their despicable ambitions. For this reason, the government and organisations ought to send a clear message to these corrupt people that data is not meant to be so freely gained or shared with other people without the people’s permission.