IMF report proposes credit scores based on web search history

The International Monetary Fund (IMF) has proposed basing credit scores of individuals and businesses on their internet search history and purchases, and urged governments to support the initiative.

On the back of a working paper that looks at the potential future of financial technology (Fintech), four researchers presented their findings which highlight that traditional banks face serious competition from social media and other digital platforms in the credit and payments sector.

One such way they propose to combat this threat from the likes of Google, Apple and Facebook is through new ways of collecting data and information on customers to determine their creditworthiness.

“Fintech resolves the dilemma by tapping various nonfinancial data: the type of browser and hardware used to access the internet, the history of online searches and purchases,” the report mentions.

“Recent research documents that, once powered by artificial intelligence and machine learning, these alternative data sources are often superior than traditional credit assessment methods, and can advance financial inclusion.

“Overall, while much of the technological progress in finance is evolutionary, its pace is accelerating fast. Fintech’s potential to reach out to over a billion unbanked people around the world, and the changes in the financial system structure that this can induce, can be revolutionary.”

The four researchers, three of whom are economists with the European Central Bank (ECB), concluded their post by urging governments to support the technological takeover of the finance sector.

Governments should follow and carefully support the technological transition in finance. It is important to adjust policies accordingly and stay ahead of the curve.”

Why is it so contentious?

The idea of judging someone’s creditworthiness based on their search history leads to an important question: Who will be entrusted to judge what searches are deemed favorable or unfavorable?

Inevitably, it will be the so-called impartial fact-checkers, who are anything but the label that they go under, selectively twisting narratives to align with their pre-held political biases.

It appears yet another opportunistic move to use the fear and uncertainty around the world as a result of the coronavirus to impose outright intrusive and subjective practices to place worth on an individual.

The acceptance and normalization of such methods are yet another step in the direction of a Chinese style social credit system, a government imposed surveillance system which monitors and judges just about every facet of citizens’ lives.