One of the tasks of the European Supervisory Authorities (ESAs) which are represented by the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA), is to monitor risks for consumers and financial institutions as well as new and existing financial activities.
Based on this mandate the ESAs have noted the continued increase in the use of Big Data across the banking, insurance and securities sectors. The Big Data include mainly the collection, processing and use of high volumes of different types of data from various sources, using IT tools, in order to generate ideas, solutions or predict certain events or behaviours (e.g. to profile customers, identify patterns of consumption and make targeted offers). Big Data encompasses not only the data itself but also the technologies and procedures to process and analyse the data. The data analysis may be descriptive, predictive or prescriptive. The data protection and consumer protection principles may thus play an important role.
The ESAs have brought in the Discussion Paper an assessment of risks and benefits of the use of Big Data and based on this phenomenon they present an overview of the possible evolution of the market. The use of Big Data may have an impact on consumers’ access to products and services and on financial institutions e.g. as regards their pricing practices and decision-making. Big Data technologies may change the way financial services are provided and may represent a competitive advantage in the future.
The ESAs seek whether the existing regulatory framework is sufficient to cover the Big Data issues or whether there are any gaps and any regulatory and/or supervisory actions may be needed to mitigate the risks and whether it might utilize the potential benefits. The ESAs found out that EU sectoral financial legislation is in principle technology neutral and as such does not specifically deal with Big Data related matters. However, some provisions within EU financial legislation are relevant for financial institutions using Big Data. Reputational, legal and cybersecurity issues also relate to the use of Big Data technologies.
8-2-2017