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Social media and trust in financial markets

All markets have to have a basis of trust between parties if they are to be successful and as we have seen in recent times the loss of trust is a terminal risk to business. Trust today however should be enhanced when you consider the value that social media brings us all.

Each year we hear that new levels of global connectivity have been reached with even tribes in central Africa and up the Amazon all connected in some way. It's even muted that within the next decade everyone on the planet will be connected somewhere in the system or on at least several databases. Now one can argue whether this is a desirable thing, as individual liberties could be under threat and undesirable parties could misuse the connectivity and the information about individuals that populate social media sites.

In another way one can also argue that with an increased knowledge about individuals and their lifestyles, it should be possible to gain a greater level of trust. This could work both for the consumer and the service provider.

How simple would it be for a bank to research an individual's profile, to gain assurance on their background that could feature in a financial credit check? Although how dangerous, it could be if someone falsified information on an individual's social media accounts.

A business could build a sophisticated credit checking capability between their suppliers and a customer making the risk of engaging in contracts, less of a concern. Someone once said that "not everything in a contract is contractual" and the implication is that the spirit to which the contract is engaged and the capability and trust to which is unwritten has to be understood between parties. Does a Social medium enhance and strengthen the contracting parties?

Much of the debate concerning social media in financial markets centres on the rather negative release of damaging information, or the danger of defamatory publications, however, there is a upside of gaining greater certainty to transact with business and investors/traders by establishing resilient credit checks and tests based on social media profiles. Whilst this is a technical possibility or even probability, is it desirable by society? 


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