EBA has published a report following its recent observations that a growing number of financial institutions use consumer data in innovative ways, often combining internally held data with data gathered from external sources such as social media. The report follows EBA’s discussion paper on the issue, in which participants were invited to comment on the risks and potential benefits of this trend. After assessing these responses and scrutinising the current rules in force on the topic, the EBA reached the following six conclusions:
- Although the use of customer data differs throughout the EU, it is being used in increasingly innovative ways and therefore requires supervision;
- The risks posed by innovative customer data usage vary according to each Member State;
- If risks are managed effectively, data interpretation can benefit the consumer, through enhanced and tailored products and services. Equally, financial institutions may see an improvement in revenue and cost efficiency, risk management and regulatory compliance;
- EBA expects to see data being used in even more increasingly creative ways following the introduction of PSD2, GDPR and the introduction of new technologies. It is hoped that the introduction of new legislation will safeguard consumers by providing a comprehensive legal framework on the processing of personal data;
- The risks arising specifically from Big Data analytics are cross-sectoral and will therefore be further assessed in forthcoming joint work with ESMA and EIOPA; and
- EBA does not consider further industry-specific legislation to be necessary at this time, but will continue to monitor the evolution of data usage through cases studies and collaboration with other European bodies.