Bank of England turns to Twitter and Facebook to help set interest rates

Bank of England turns to Twitter and Facebook to help set interest rates

The Bank of England is setting up a taskforce to monitor social media posts and online jobs boards to get a clearer picture of economic activity and help inform monetary policy decisions.

The special team, set up by the Bank's chief economist, Andy Haldane, has been charged with exploring how new sources of data could improve its picture of the British economy.

In an interview with Sky News, Haldane said that the Bank had started to explore the use of social media chatter as a more timely indicator of mass market sentiment.

"Official statistics tend to be lagging and tend to be revised. And what this scraping of the web can do is give us a better today read on what's going on," he told Sky.

Haldane says the Bank has established a Big Data lab staffed by a new analytics team to construct algorithms and models for extracting and analysing data gleaned from unconventional online sources.

"This is quite a big strategic change for the bank," he told Sky, describing the initiative as a big shift from previous methods of making policy decisions.

Comments: (5)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 05 January, 2015, 06:10Be the first to give this comment the thumbs up 0 likes

Hope BoE has firehose access to Twitter so that its inputs are free of selection bias. 

A Finextra member
A Finextra member 06 January, 2015, 02:22Be the first to give this comment the thumbs up 0 likes

This is only a beginning. In the near future banks will start using more and more of social media data to deliver a lot of value added services to their clients. Combining their internal transactional & customer data with the social media information, banks can provide valuable insights to their customers. Exciting times are ahead in the fintech space !!! Curious to watch the future unfold in unpredictable ways !!!!

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 06 January, 2015, 06:09Be the first to give this comment the thumbs up 0 likes

@BrindaN:

Not sure if your comment is specific to any one geography because I know many banks in India and UK, among other countries, that have been using social media intelligence in sales, marketing, product development and customer service for over 3 years. More at http://www.finextra.com/blogs/fullblog.aspx?blogid=6912 and http://www.finextra.com/blogs/fullblog.aspx?blogid=8609

A Finextra member
A Finextra member 07 January, 2015, 22:59Be the first to give this comment the thumbs up 0 likes

I feel the social media adoptions in banking have been peripheral compared to the potential. Those also have been attempted by limited number of large banks. Those have been driven more from bank centric initiatives such as sales, marketing etc without touching the core of the customers' requirements. How much of real time intelligence, predictions & options do customers get from their banks compared to what the likes of 'Amazon' offer. Having been exposed to such user experiences , when I log into my bank portal, I wish I could get more .Given the mind boggling technology options that are unfolding today and the trends, I think the near future holds much more promise and potential which I am sure the banks will be compelled to exploit.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 08 January, 2015, 07:55Be the first to give this comment the thumbs up 0 likes

My experience is quite different: Every time I log on to my current 3 banks' NetBanking, I see an offer right on top. Even when I don't log in to NetBanking, I keep receiving offers via SMS, Mobile App, Social Media.

Cardlytics, just one provider of Amazon-like offers for banks, claims a portfolio of 400 FI customers. Agreed that smaller banks might not be using this kind of technology but the same is equally true for smaller ecommerce companies when compared to Amazon.

Most importantly, by the very nature of their products / services, a comparison between banking and ecommerce is fundamentally misplaced: I'm hardly a heavy ecommerce shopper but I must've placed at least 100 orders so far only on Amazon. Whereas, thanks to my somwhat nomadic career, I've banked with around 15 banks in 5 countries and I haven't had the need to buy more than 20 banking products during a like period. After all, how many checking accounts, fixed deposits, CDs, funds and mortgages can one buy in a lifetime compared to the number of books, music, toys, clothes, gadgets, etc.?