LONDON (Reuters) - European banks and insurers could face new rules to control their use of “big data” to target customers with products after EU watchdogs said they would investigate the area.
Big data refers to companies or other institutions using digital information on consumer behavior 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 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 in so-called profiling, for example based on age, gender, health or ethnic background.
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 topic aims to analyze 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 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, look at spending patterns to decide where to locate a new branch or personalize financial products.
Last month BlackRock, the world’s biggest asset manager, said it was going to use big data to help its portfolio managers pick stocks.
Reporting by Huw Jones; Editing by Pravin Char