A researcher and a senior fellow, both working for the Mossavar-Rahmani Center for Business and Government at Harvard’s John F. Kennedy School of Government, released a study evaluating the social impact of big data, as well detailing how credit card companies are using vast datasets to improve and increase business with customers. While Big Data can help customers by preventing fraud and engaging in higher quality customer service, the immense amount of information can also be detrimental to consumers if abused by credit companies.
In 2018, the financial services industry invested approximately $9 billion in Big Data, with that level of investment projected to only grow 17% this year and next. The double digit growth suggests the promise of using data to reduce fraud and expand access to better credit products. Also, companies can choose to increase transparency with consumers and enable them to understand more complex financial concepts.
However, the proper public policy is essential to maintaining a balance between encouraging innovation and stability for credit lenders, while simultaneously expanding credit access to previously underbanked populations. Existing subprime lending companies already use intense application processes that force people to compromise a lot of their privacy, and access to more data without adequate precautions will only increase the privacy concern.
A common concern nowadays is algorithmic justice, the theory of ensuring that algorithms do not ultimately result in discrimination selection biases against marginal communities when individuals are applying for credit access. The paper suggests that the Federal Trade Commission, as well as the Consumer Financial Protection Bureau, should further their partnering to ensure that the increased use of Big Data is properly monitored and regulated.
