Data is the new oil, including those collected by anything but scientific tools such as social networks and online interactions in general. The new frontier of Big Data is called digital reputation and is one of the so-called Alternative Data, i.e. an unexplored but invaluable mine of useful information both for companies themselves, which can plan their business by approaching customers' needs, and for banks, which can thus perfect credit scoring, i.e. the creditworthiness score of the companies themselves. The new fintech horizon has such high potential that it is estimated that it can reach a value more than 17 billion between now and 2027.
While on the one hand the use of social networks as a reliable source for financial analyzes has been cleared by the Bank of Italy itself, which recently compared the data emerging from Twitter with those of Istat and the inflation swaps as a price spy, it is also true that Alternative Data, not exactly conventional, they need to be collected, filtered and managed in the right way for them to become a credible source of information. That's what he takes care of The Data Appeal Company, the fintech founded and led by Mirko Lalli, based in Milan and Florence. It was precisely with Lalli that we tried to get a better explanation of this phenomenon.
What is digital reputation and is it really becoming a relevant source of information for creditworthiness?
“Digital reputation, i.e. how the company positions itself through online communication and is perceived and told by its customers, represents increasingly relevant information both internally and externally. Internally, because the company can collect important strategic indications by analyzing strengths and weaknesses, helping to objectify and prioritize any operational choices. Externally because digital reputation contributes to enriching the analysis of the company by including information based on perception, both in terms of communication and reputation, dimensions that impact performance, revenues and financial results of the same because it is able to influence the choices of purchase. the Data Appeal Company develops proprietary indicators, based on a variety of datasets, to provide banks and financial institutions with an easy way to analyze and compare these complex dimensions".
Can you tell us if today many Italian banks already use this data and what importance do they give it?
"Many banks, including "local" ones, are moving towards the adoption and integration of this new model of "observation" of businesses, to enrich their credit profile in an innovative way and be faster in disbursing loans in the so-called " smart”. Among other things, the pandemic context, in addition to accelerating all the processes, voluntary and involuntary, of Digital Transformation, also accelerates the generation of new online content and new data, thus making the use of Big Data even more relevant to integrate the assessment of merit credit".
Digital reputation affects credit scoring but upstream it can also be a useful tool for companies to better guide the business. Is there awareness of this on the part of Italian companies?
“It's exactly what we provide companies through a data model that allows them to "configure" and "design" operational, economic and product solutions, much closer to the needs of their customers and comparing themselves with direct competition. We produce profiled reports through punctual analyzes using our proprietary algorithms, highlighting market and territory needs where the company insists. Some companies have seized this opportunity and are aware that this new method of analysis is useful for obtaining more information, making better decisions and remaining competitive".
How is digital reputation data collected? Only from feedback on websites and interactions on social profiles or also from other sources?
“We have a mix of sources that we constantly query and which are part of the information content processed by our AI. To date we collect data from around 100 channels and digital sources and of course this includes the main social media”.
This data needs to be collected, filtered and managed in the right way for it to become a credible source of information. With all the flows (often controlled, but in any case prey to the phenomenon of hating and "keyboard lions") traveling uncontrolled on the network, there is no risk that the outcome could be distorted and the image of a penalized (or advantaged) company?
“Our analyzes pass through semantic engines – developed and implemented by us – which analyze contexts and use multiple sources before validating the final data that is made available. We do not stop at the single analysis of a channel or a single comment but we collect more information from different sources for the same point of interest, normalizing the data at the end of our analysis process through proprietary algorithms that represent one of our corporate assets".
In your opinion, is there a more “reliable” social network than others?
“It depends on the market context in which the customer asks us for an analysis. Some markets require the observation and analysis of some territorial context data - mix mix - others more precisely the use of "certified" reviews, therefore not redundant. Reliability is built through the relevance and use of a multiplicity of channels, in order to balance any single channel bias. For this we plan to continue to enrich our data sources”.
However, Alternative Data does not only mean customer feedback and sentiment analysis via the network, but also geographical information, location intelligence information and external and contextual factors such as the climate. Can you explain how these aspects may be relevant?
“Analysis of multiple contexts is essential to refine – if appropriately and skilfully used – the data made available by companies like ours that process information to provide synthetic indices useful for making business and strategic decisions. Our proprietary indices have been developed precisely to provide precise indications, for example on how a company implements good sustainable development practices according to the 17 goals set by the United Nations - Fair Index - or on the protective measures adopted with respect to containment of the Covid – Safety Covid Index. Other indicators that take into consideration the trend of demand (flight searches, hotel searches and prices, weather, events, etc.) in order to predict future dynamics”.
Do you really think companies from now on will have to pay more and more attention to their social profiles, as if it were an objective indicator of quality?
“I believe that the change of mindset of companies and of those who manage them is inevitable. In an ever faster world, communicating in the right way and at the right time, providing real and transparent indications of the services and products offered, is essential. Today more than ever it is necessary to adapt to this paradigm shift imposed - in part - also by the pandemic situation we are experiencing".
