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Monday, December 21, 2020

December 21, 2020

Four International Monetary Fund researchers argue financial institutions may be more lenient if they had access to our browsing, search, and purchase history.

We all know that we are never really safe online and that our web history is likely being tracked. But for what reason we may ask ourselves? A new blog post by the International Monetary Fund (IMF) may provide some insight.

Finance and technology

Four researchers examine the results of a working paper that explores the ever-evolving relationship between finance and technology. "We study the effects of technological change on financial intermediation, distinguishing between innovations in information (data collection and processing) and communication (relationships and distribution)," write the experts in their study.

The researchers further look at the possibility of using your browsing, search, and purchase history to determine your credit score. This may allow some individuals that are overlooked by financial institutions to have access to more loans, state the writers.

The researchers argue that if lenders have a better picture of a client's entire history, they may be more willing to be lenient with them. “Banks tend to cushion credit terms for their long-term customers during downturns,” they write.

To put in simple terms, the proposal is that giving banks access to our most private data would develop an intimate relationship that would allow more of us to benefit from this cushioning. The writers do acknowledge that this would lead to huge privacy and policy concerns, and this just may make this idea unworkable.
In practice

The researchers also fail to explain how such a system would work in practice. Would Facebook communicate with our financial institutions directly or would we have to gather and provide the data? All in all, it may not seem like a plausible idea to many.

Some would also argue that it paints a picture of a very dystopian future. Although, the researchers argue that this tracking would be for our own good (by providing access to more financial services), the public can likely fail to see any real benefit. Most people would prefer maintaining their privacy over financial compensation. Still, the paper and blog do make for an interesting read.


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