European banks and insurers could face new rules to control their use of “big data” to target customers with products, after EU watchdogs said that how they used the information would be investigated.
The three EU financial regulators – the European Banking Authority, European Securities and Markets Authority, and European Insurance and Occupational Pensions Authority – will focus on the “opportunities and challenges” related to the use of big data, they said in a joint statement on Monday.
The statement came on the eve of the European Court of Justice’s ruling on the EU-US Safe Harbour data sharing agreement. On 23 September, a senior legal advisor for the ECJ called the agreement legally invalid.
Big data refers to companies or other institutions using digital information on consumer behaviour from a wide variety of sources, such as their own databases, to make market predictions, or spot patterns. The global financial services industry is expected to spend billions of dollars in the coming years to improve their analysis capabilities.
But civil liberties campaigners have expressed concerns that use of such data could breach personal privacy. They also say it could be misused to discriminate against certain sections of the population through profiling based on age, gender, health or ethnic background.
“The topic aims to analyse the adequacy of sectoral regulatory frameworks and identify any regulatory and/or supervisory measures which may need to be taken,” they added.
They will look into the matter in the coming year, but did not give further details about the nature of the work or when they would announce findings.
Banks are hoping to use in-house data in better ways to spot fraudulent activities more easily, and look at spending patterns to decide where to locate a new branch, or personalise financial products.