Banks, customer loyalty, anonymisation & the single customer view

Out-Law News | 29 Nov 2012 | 6:12 pm | 2 min. read

John Salmon’s Financial Services blog

Financial services sector head John Salmon brings you insight and analysis on what really matters in the world of financial services.

Research published by Ctrl-Shift last week highlighted that retail banks need to do more in terms of strategy when it comes to customer loyalty. The report stated that banks disproportionately focus on customer acquisition and all but neglect customer retention.

65% of the banks interviewed confirmed that in their view "acquisition comes first, loyalty second."

Ctrl-Shift suggests that market forces are requiring banks to think more in terms of customer retention and that they must strive to become the organisation which controls "the data dialogue with the consumer".

But how can a bank achieve this? The report suggests that banks ought to focus on delivering innovative financial management information services, engaging in big data analytics projects to gain greater customer insights and eliciting 'volunteered personal information' from customers in order to personalise and target services, while also increasing information sharing arrangements where possible.

Banks looking to take these steps should be aware of the guidance provided by the Information Commissioner's Office (ICO) last week on anonymisation.

As anonymised data is not subject to the requirements of data protection laws, the more a bank can effectively anonymise data, the more it can provide information services that consumers actually want, tailor those services to specific target groups and transform those services in response to changes in technology and customer sentiment.

The ICO has suggested that organisations implement a detailed anonymisation risk analysis framework. Organisations that can demonstrate that they have followed the steps set out in the guidance will have good reason to argue that any unintentional disclosure of personal data resulting from the use of anonymised data should not incur enforcement action where the analysis indicates that the risk of identification is a remote one.  

Banks operating across Europe will still have to wait and see how other regulators respond to the ICO's thoughts. As noted last week, it would always be open to other European regulators to take a restrictive view of what may be considered a remote risk of identifying someone in connection with anonymised data.

For most banks though, anonymising data can only ever be part of the solution, as it will not address the need to achieve a single customer view. Every bank is looking to maximise the value of its customer relationships and visibility across all accounts and products held by individual customers. Account, investment, card and loan data all need to be brought together in one consolidated solution and compared with marketing data.     

In reality, banks face challenges in providing a single customer view, particularly in structures where card related services operate in a silo from other retail bank offerings. Putting to one side the practical implications of dealing with systems integration issues arising from mergers and acquisitions, data quality issues arising as a consequence of reliance on legacy infrastructure, data formats or technical anomalies, and different approaches to  platform strategy, any cross-organisational sharing of data must comply with binding corporate rules, as applicable, and ensure that data protection standards are not compromised.

Banks would also need to be satisfied that fair data collection notices are transparent when setting out the purposes for which data will be used to achieve a single customer view and in highlighting the range of products, entities in the corporate group and different brands to which sharing arrangements may apply.