Article written by Paula Newton and Maria Fonseca
The way the digital economy is unfolding and developing over the last decade is absolutely astounding. One area particularly affected by the digital environment, is the one of finance. Every day we see a new innovation showing up in the fields of economics/finance, challenging everything we know about what money is. A good example of this is China’s recent introduction of a social credit score scheme. The approach aims to provide better support for people that live within the law, and each person will be provided with a score . The scheme might be a bit controversial particularly in terms of ethics. It is explained by the Digital Economy Forum that by 2020 each Chinese citizen will be assigned a rating. The rating will be drawn together based on information about the person’s social status and economic standing. It will allow people to benefit from rewards, if deemed appropriate, but also to be restricted in certain ways, if the person is not considered worthy. The system means that the Chinese government has considerable access to personal information of the population, including everything from spending habits to tickets for poor driving. The score could be used for activities such as getting loans and gaining access to employment. The slogan for the scheme has been set as follows:
“To allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step.”
The government’s scheme is not currently up and running, but it has allowed various organisations the chance to build their own social credit systems, to experiment in this area. One of the companies that has been involved with this, is Alibaba. The organization’s financial division is known as Sesame Credit, and it has developed an app. With this app, users are able to opt in, and in doing so they open up the opportunity to gain access to various perks, which they get through their social credit score. The app purportedly has scores up to a total of 950. Where users have large scores they can share these with friends. The benefits of a high score include being able to pass through airport security more rapidly, as well as promoting the score on dating apps to attract potential suitors more easily.
Analysis shows that there are advantages and disadvantages associated with the Sesame Credit app in its current, pilot state. The benefits are not to be sniffed at. These include the ability for the government to take preventative measures to protect against identity fraud, to monitor fraud in general, and to avoid intellectual property theft. Another advantage that has been observed is the chance of a “rigorous business environment” due to the fact that people can raise their scores when they make purchases using Alipay. However, clear disadvantages can also be observed with the system. These include the intrusion on personal privacy, and the considerable power afforded to the creators of the system to decide what is right and what is wrong from a moral and ethical perspective. Additionally, there is no room for error for individuals, since if they make a mistake their score could be seriously impacted. There is also no legal regulation behind it.
One of the major learnings from the system that has been developed is that while they bring about the opportunity to encourage people to engage in behaviour that might be considered “good”, there are problems with regard to ethics associated with this that are very complex. Many of these come down to values and perception. For example, who has the right to decide what behaviour is good and bad, and which value system should be selected for this purpose. What people in one place think is good may not be considered good in another place, as a result of differences in cultural values and perceptions. Should people be judged on this basis? It is highly questionable.
Other ethical questions arise with regard to the use of such systems. For example, if a person does not want to be a part of such a system and opts out, does that person become discriminated against? The answer is likely to be yes, because he or she would not have social credit in the system, but this is questionable ethically. Another question is what happens if a person gets into trouble financially as a result of being on the receiving end of a scam. In that case the person might end up with lower access to credit under such a system, which hardly seems fair.
Until the considerable ethical challenges associated with these types of approaches can be surmounted it is deeply questionable whether they should be implemented.
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Launched in 2016, Humaniq aims to provide mobile finance to the 2 billion unbanked population through its mobile app for good, that uses biometric authentication to replace traditional methods of ID and security. Humaniq’s open source stack and API will be available for startups and other businesses to build services on its core technology, making it easy to adapt their service and plug it into Humaniq’s network to reach a huge, untapped audience.
Paula Newton is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Paula’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Paula has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Paula has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.
