EBA consults on innovative uses of consumer data by financial institutions
NFU is responding to a consultation from the European Banking Authority on the different ways financial institutions can and are using consumer data. The consultation identifies risks and benefits for consumers and financial institutions, as well as for financial integrity in general. The replies that EBA receives on this consultation will help to inform EBA if they need to take further actions to for example regulate this practice in different ways.
According to EBA, the potential benefits to consumers include cost reductions and improved product quality, while financial institutions can benefit from new sources of revenue and reductions in costs. EBA also flagged risks for consumers, mostly in the form of information asymmetries, and data misuse and security. Risks to financial institutions are also identified in the paper as the questionable use of consumer data may expose institutions to reputational risks. Also, institutions which are not in a position to process consumer data may not be able to compete with new market entrants specialised in using consumer data. Issues related to data security are also valid for financial institutions, since they may become exposed to legal risks too if their IT and storage systems are compromised.
NFU believes that it is important to ensure the safety of the consumers’ integrity and personal data why it is important to include the possibility of human intervention in the advice and analysis process. The increased use of personal data can both assist employees in advising consumers but it also creates greater responsibility for the employees handling the data. NFU will also raise the perspective of risk to employees’ personal data as it was not included in the paper by EBA.