One of the key advantages for brands mining Big Data is the information it can reveal about their customers. Trends can be spotted and in many cases actions by customers can be predicted before they take place.
This is particularly applicable to financial services because records of financial transactions are thorough. Financial service companies can use customer behaviour to predict the best time to offer a new product – such as a loan – or even when a customer might be struggling and about to default on financial commitments.
But European regulators are pushing back, concerned that if companies can analyse data and create predictions that can be used to sell additional products then it may be seen as an invasion of privacy by some customers.
The three EU financial regulators – the European Banking Authority, European Securities and Markets Authority, and European Insurance and Occupational Pensions Authority – have joined together to study the effect of Big Data on customers in Europe. There is no formal data announced for their report, but they have indicated that they will be studying Big Data closely for about the next year.
Banks and insurance companies have many legitimate uses for Big Data that go beyond just marketing alone, fraud prevention for example, so it will be important for companies using Big Data to explain the benefits to the regulators over this coming year.
If the regulators conclude that analysing data in this way is invasive, it could create a problem for many banks that are now investing heavily in this technology. It’s up to the industry to demonstrate their need.