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Digital technology has made it easier for companies to collect user data, but this raises a major concern about security and data usage.
As more companies gather information about their customers, those same customers are left to wonder how companies will use that data. Will they simply use it to better serve their customers? Will they share the data with third parties? And is this data secure?
The rise of fintechs, which are exploring new models for leveraging data, has only intensified these concerns.
To that end, the European Banking Authority (EBA), a regulatory body of the European Union, has released a white paper that dives into this issue. This paper includes a call for comment with an August 4 deadline.
The paper’s goal is to "identify risks and potential benefits of innovative uses of data to consumers, financial institutions, and financial integrity more widely" and to then determine if the current regulatory framework for data needs enhancements.
Thus far, the EBA found that the potential benefits of consumer data collection include reduced costs, improved products, and new revenue streams. The potential risks include information asymmetries, data misuse, security problems, and risks to reputation.
Security will be of the utmost important as we move through the most profound era of change for financial services companies since the 1970s brought us index mutual funds, discount brokers and ATMs.No firm is immune from the coming disruption and every company must have a strategy to harness the powerful advantages of the new fintech revolution.The battle already underway will create surprising winners and stunned losers among some of the most powerful names in the financial world: The most contentious conflicts (and partnerships) will be between startups that are […]
