Out-Law / Your Daily Need-To-Know

Out-Law News 1 min. read

Success of digital financial services economy relies on resolving privacy issues, says expert


Financial services firms and technology providers must find a solution to privacy issues to enable the digital financial services economy to thrive, an expert has said.

Financial services and technology law expert Luke Scanlon of Pinsent Masons, the law firm behind Out-Law.com, said that there are major benefits to be gained by consumers if they allow their data from social media to be used by financial services firms. However, he said the onus is on those firms and technology providers that hold that data to broker agreements that give consumers control over how their data is used.

Scanlon was commenting after a planned trial by insurer Admiral of a tool to analyse motorists' Facebook activity was called off. Admiral wanted to analyse the data to tailor insurance premium offers to those consumers.

"Financial services firms and technology providers can benefit greatly from the digital financial services economy," Scanlon said. "Technology companies can open up new revenue streams by releasing access to data they are gatekeepers of, while financial firms can use the data they collect from those providers to personalise the services they provide and attract consumers with tailored offers, such as discounts. The arrangements stand to benefit consumers, particularly since it can lead to reduced prices for accessing financial services, such as lower motor premiums, for example."

"However, the mutually beneficial arrangements rely on consumers having trust over the way their data is used," Scanlon said. "It is important that businesses do not use personal data for purposes that consumers do not expect. There are clear rules under data protection legislation on purpose limitation, and businesses can expect to face tighter restrictions on using or sharing data they have previously collected for new purposes under the new EU General Data Protection Regulation (GDPR)."

"Beyond issues of compliance is the matter of reputational damage that businesses can suffer if they get privacy issues wrong. In the worst cases businesses can lose customers if they mis-manage data use and sharing," he said.

"It is in everyone's interest for financial services firms and online data gatekeepers to find solutions that allow the full potential of digital financial services to be realised whilst at the same time respect privacy rights and data protection law," Scanlon said.

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.