Financial regulators in Europe are concerned about the impact Big Data techniques may have on consumers and their access to products and services, prompting regulators to mull new rules in that area.
According to a report in TechCrunch, regulators are concerned that more granular algorithmic analysis of data sets could lead to consumers being discriminated against. The report noted that in Europe there aren’t regulations on the books about data usages and the financial services sectors.
In a public discussion paper, regulators talked about the pros and cons of Big Data being used at an increasing rate and how it will impact personalized financial products and services. The regulators said one positive impact from Big Data is financial products that are tailored more to individual consumer needs. It could, for example, usher in an era where there are more high-quality consumer financial products that aren’t as expensive. For financial firms, the regulators said they would benefit from increased efficiencies in terms of processes and making decisions. It can also help manage risks and fraud.
On the flip side, the regulators also expressed concerns that Big Data will be used to prevent certain customers from accessing certain products and services and for financial companies to use it to price products based on a more detailed knowledge of how customers pay or switch products. There could also be limitations and errors in the data that could hurt the reputations of the financial firms.
“Potential entry barriers in accessing Big Data technologies could also have negative implications on innovation and competition in the financial markets at the detriment of consumers’ welfare,” they said, according to TechCrunch’s summary of the sweeping report. TechCrunch noted regulators aren’t looking only at financial institutions that use predictive analytics but also ones that use various types of Big Data analyzation such as descriptive, predictive and prescriptive analytics.