The European Banking Authority has kicked off a debate about the benefits and risks associated with the ever-growing amounts of consumer data available to financial institutions.
Financial institutions have always used the data consumers hand over for a host of applications, but in recent years they - and a host of new fintech challengers - have been finding ever more innovative ways to put increasing amounts of information to use.Download the document now 285 kb (PDF File)
The EBA says that it is particularly interested in payment data, which offers banks a continuous insight into consumers' purchasing habits and preferences.
Potential benefits identified by the paper include cost reductions, improved product quality, and new sources of revenue for financial institutions, whereas the risks consist of information asymmetries, the misuse of data, data security, as well as reputational risks for providers.
Although general provisions apply to financial institutions on secrecy and conduct and on data protection, there are only a few requirements in EU legislation specific to the FS sector that address the use of consumer data by banks.
The EBA is inviting responses by 4 August to its paper that it hopes "will allow it to make a better informed decision on which, if any, regulatory and/or supervisory actions are needed to ensure that the regulatory framework mitigates the risks while also allowing market
participants to harness the benefits from the innovation".
Read the full paper: