Financiers’ use of Big Data to draw EU scrutiny this year
20th September 2016. By John Rega
Financial companies that mine their customers’ personal information are set to come under scrutiny as EU authorities intensify their investigation into Big Data, a senior insurance regulator has said.
EU financial agencies plan to forge ahead this year with a call for public comments on how Europe should respond to today’s unprecedented scale of data collection and manipulation, said Fausto Parente, executive director of the European Insurance and Occupational Pensions Authority.
The study reflects broader concerns at the European Commission in Brussels that the bloc is falling behind the US in the “data-driven economy,” a catchall term for how Big Data is spurring new services, products and business processes. Antitrust officials at the commission have meanwhile warned that companies controlling unique datasets could pose a competition threat by excluding rivals from a market.
Speaking at a conference in Paris, Parente said that insurance, banking and securities regulators are considering “which role the regulatory authorities may play in this respect, how they can support financial innovation while continuing to ensure that the financial consumer protection framework is functioning well.”
Eiopa and other financial regulators are stepping up their examination of data-driven services, at a time when startups threaten the business of established providers in some banking and investment services.
The investigation also comes as the incumbent operators are drawing on medical or transaction histories to tailor product offers for clients, stoking apprehensions similar to those surrounding the personal data amassed by Google and Facebook.
Insurers could use bulk medical history data to predict diseases such as diabetes, to help target preventive measures, said Andreas Braun, global head of data and analytics at Allianz.
Data usage isn’t about fighting for a bigger slice of a limited business, Braun told the same conference. “What we all strive for is to create a bigger cake.”
Slicing the cake
But most people remain skeptical about this use of personal information, responded Klaus Müller, executive director of the Federation of German Consumer Organizations.
“Everybody loves cake, and if the cake is combined with the promise of staying healthy, that is delicious cake,” Müller said. Still, he said, “experience tells them that when someone promises them a big cake, they do not always get a chunk of this cake.”
The coming consultation by the three agencies comes as the commission, the EU’s executive branch, is preparing its own policy communication in November on data use by companies across all sectors.
“We will work on the right legal framework,” which will apply to the financial industry like any other sector, said fellow conference speaker Márta Nagy-Rothengass, head of the commission’s unit on data policy and innovation.
The commission program aims to encourage new technology while underscoring trust and privacy, Nagy-Rothengass said. The policy paper aims to address questions including the ownership of customer data and liability for its use.
She cited an example relevant to insurers, asking who would be liable if a self-driving car killed a pedestrian. Should responsibility lay with the car designer — or with an algorithm writer who decides to prioritize the lives of the passengers over those crossing a street on foot?