Reputation Rating And Scoring: The Trends For Present And Future

Score Hub
Score Hub
Sep 3, 2018 · 6 min read

Shaping the reputation and rating of a person is quite a complex and non-transparent process, but apparently, it’s important for many of us.

What do ratings show us?

We can understand a person in absentia, find out about his dignity and shortcomings the way those people who previously contacted him and dealt with him reviewed it.

What can we learn out of those indicators of a person’s reputation?

Can we trust a stranger, or not.

Every day we meet new people, both in private life and in business contacts, and we can not always understand a person we deal with correctly at a glance.

Perhaps it’s the most honest and decent person, with an impeccable reputation, and perhaps the other way round, we simply don’t know.

How can we understand a person at first sight, if we’ve just met him/her, and nobody trusted recommended him/her to us?

Serendipity or the sixth sense, you could say, or by eye contact, others may add.

Yes, this is an option, but still, there are not many people who can guesstimate a person visually or intuitively.

And what about those who do not have intuition at all, and whom any visual contact does not help?

No chance for them?

Of course, such people could rely on some kind of public ratings or scores.

Many countries are actively working on rating systems for their citizens, and one of the current leaders is China: they have already been testing the internal rating system for Chinese citizens.

This system was implemented by Creditsesame.com in 2015.

Users find it very attractive and exciting when they gain more points and their score raises.

According to Wikipedia: “The Social Credit System is a national reputation system being developed by the Chinese government. By 2020, it is intended to standardize the assessment of citizen’s and business’s economic and social reputation, or ‘credit’.”

And China is by no means the only country that actively develops this topic, considering it one of the most important aspects of modern digital realities.

Here are a few examples of perks for citizens with a high Sesame Score:

A hospital in Guangzhou offers patients with over 650 Sesame Credit to pay post-medical treatments (with a cap of RMB 3,000):

Users with a Sesame Score above 600 can book a xiaozhu room (it’s a short-term rentals service) without any deposit and get 50% off on the first-night stay:

Also, new Ofo users (it’s a bike rental service) with a Sesame Credit score above 650 can sign up for their app without paying RMB 99 deposit:

Other countries also implemented commercial and public rating solutions, both for politicians, officials, and citizens.

And are they all perfect?

Can anyone access them online and see the rating of any other person? –

Apparently, no.

Why not?

The reason is simple: there is no such public rating in existing services.

Politicians in many countries use a kind of internal algorithms of gaining/losing points, which are totally not clear and transparent for anybody outside politics domain.

It is clear that there are new challenges ahead, but what about commercial organizations that are interested in understanding their clients, their reputation, and accountability?

To understand the topic, let’s take the most problematic banking domain and the credit rating of citizens.

On the one hand, everything seems pretty clear: a person works, has some loans and a credit history and can be assigned with a certain rating basing on these qualitative and quantitative indicators.

On the other hand, it’s clear the credit ratings that banks use are really far from perfection in the modern digital world: gig economy, tokens, crypto-currencies — all these opportunities are widely used by many people and most of them are still beyond any regulations, and therefore, cannot be considered as any standard rating variables.

Now we have an issue with banks’ approach to ratings in our rapidly changing world.

Here’s an example.

Let’s pretend a hypothetical situation: a person had a job, and one day some cutting-edge technology entirely automated his/her workflows.

So, this person lost his/her job because of literally a progress.

Technologies sent him home for the public dole, and now he/she became unemployed.

He/she can no longer pay for loans and afford the life he/she previously lived having borrowed money from banks.

Is that the end?

This person cannot be rated positively anymore and have chances for a better quality of life?

Is this right? –

Obviously, no.

Or another story.

There was a freelancer who paid only basic taxes simply because of his/her off-the-books employment status.

Or once there was a successful crypto projects investor.

Or, you tell me your story. Most probably any of you has a friend whose story is eligible to be listed among our examples.

Each of those guys from our stories (a freelancer, a crypto investor etc.) does not have any confirmation for their sources of revenue, although all of them earn more than many others by doing a good job.

Their credit rating is likely to be low, they will not be able to buy a good house and an excellent car with installments or using loans, since they can not confirm their income, but they can pay much more than those who have a declared salary.

The above mentioned situations are not unique, they happen all over the world.

That proves us that the existing rating approach is not effective, and we need to look for other approaches in the changing world of decentralized technologies, gig economy, and the new p2p and b2c opportunities.

So, everyone realizes the need for a proper scoring system and understands the existing issues.

Moreover, some people even know how to improve such a rating and make it more objective and realistic.

What do they need to bring such solution to life?

Data from social networks.

Why social networks?

It is a social network where many of us make spectacles, demonstrating all their everyday activities.

It is a social network where a person comments, likes, shares and leaves another digital trace.

Basing on such digital traces some countries have already developed their rating systems.

This approach is used to issue visas at the state level, and to ease the understanding of a partner, subcontractor or candidate for some job position at the company’s level.

Having enough data from social networks and developing unique algorithms, it is possible to create a system of rating and reputation of a person.

This could solve a lot of distrust issues and answer many ignorance questions both in personal life and business communications.

Especially such a system could be used for lending institutions and companies from varied domains since they could view more insights about the potential customers and their interests.

For instance, alike scoring system is already in development in Ukraine (ScoreHub.io).

SUMMARY

Researching different countries and business areas experience with reputation rating systems shows that these trends of the present will grow even more actively in the nearest future.

Pretty soon we’ll see the solutions based on Blockchain technology and involving Artificial Intelligence power.

And everyone will have an access to the transparent ratings, which will be very difficult to forge or change.

This will allow us to really evaluate our new contact or business partner online, even while our conversation.

This is the future, which already becomes our present.

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