# How GDPR will impact the banking and finance sector?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2017-11-29
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Maximising Consumer Sign-Ups with GDPR Compliant Consent
Meta Description: Discover the essential elements CMOs must focus on to ensure GDPR compliance, from crafting effective consent statements to involving frontline staff in the
URL: https://financedigest.com/how-gdpr-will-impact-the-banking-and-finance-sectorhtml

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GDPR is a hot topic in the news at the moment. Scaremongering is rife because the penalties for non-compliance are huge –with fines of up to €4 million euros or 4% of global annual turnover being potential risks.

![Caroline Kimber](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd291117-3-300x200-1736843200161-compressed.jpg)

Caroline Kimber

GDPR becomes law in May 2018, and given the importance of the legislation and the magnitude of the fines, most large organisations have GDPR [task forces](https://www.financedigest.com/european-privacy-watchdog-creates-chatgpt-task-force.html "European privacy watchdog creates ChatGPT task force") in place reviewing information security and data process flows and establishing rules for data governance best practice.

Whilst IT and data [management processes are a key element of GDPR compliance](https://www.financedigest.com/managing-compliance-complexity-will-deliver-security-rewards.html "Managing compliance complexity will deliver security rewards"), it’s vital that CMOs actively engage in GDPR too. If your organisation’s GDPR initiative is led by IT, rather than Marketing, then the emphasis will be on managing risk and establishing watertight processes, rather than creating a database of engaged, opted-in [consumers to fuel](https://www.financedigest.com/increasing-consumer-adoption-to-fuel-demand-for-automotive-gear-oil-market.html "Increasing Consumer Adoption to Fuel Demand for Automotive Gear Oil Market") CRM activity.

So here are the five core elements of GDPR that CMOs must focus on:

**Consent statements**

Under GDPR, consumers must now opt-in to receive [marketing communications](https://www.financedigest.com/improving-reputation-in-the-banking-sector-through-marketing-communications.html "IMPROVING REPUTATION IN THE BANKING SECTOR THROUGH MARKETING COMMUNICATIONS"). Pre-ticked boxes are not acceptable; there must be clear affirmative action. So getting the wording right on your consent statement is [key to maximising the volume](https://www.financedigest.com/automotive-navigation-solutions-market-size-and-key-trends-in-terms-of-volume-and-value.html "Automotive Navigation Solutions Market Size and Key Trends in Terms of Volume and Value") of consumer sign ups. If consumers can’t [see the benefit of signing](https://www.financedigest.com/adecco-sees-signs-of-a-hiring-slowdown-at-start-of-2023.html "Adecco sees signs of a hiring slowdown at start of 2023") up because the consent statement is full of legalese, or scares them into thinking that their personal data will be shared with all and sundry, then they just won’t opt-in. And if they don’t opt-in, you will lose the [opportunity to speak to them and further engage them in your products and services](https://www.financedigest.com/hybrid-working-a-risk-or-opportunity-for-the-financial-services-industry-2.html "Hybrid working: a risk or opportunity for the financial services industry?").

Advertising and CRM communications are crafted by experienced copywriters.  Different messages are tested to see what generates the optimum response across different channels. Consent statements need to be approached in the same way. Test, refine and test again until you’re confident that your sign-ups are being maximised.

In the banking and [finance sector](https://www.financedigest.com/why-the-finance-sector-must-prioritise-mobile-security-over-innovation.html "Why the finance sector must prioritise mobile security over innovation"), it’s also crucial to involve staff who are on the front-line of dealing with customers, for example branch staff, call centre operatives and IFAs. They need to be engaged in the process of obtaining consent and understand the importance of gaining it along with the penalties for not doing so.

**Breadth of Data**

One of the principles of GDPR is data minimisation, which means that organisations shouldn’t hold more personal data than is needed. Again, it is critical that the [marketing team](https://www.financedigest.com/frameplay-announces-new-attention-metric-in-video-game-environments-validated-in-partnership-with-dentsus-attention-economy-team-by-first-to-market-studies.html "Frameplay Announces New Attention Metric in Video Game Environments, Validated in Partnership with dentsu’s Attention Economy Team by First-to-Market Studies") inputs into this process. IT departments are likely to take a very literal view of data variables, only looking at the minimum amount needed to service a particular product. For example, for a simple savings product with no fixed-term tie in, one might argue that the only variables needed are the customer’s contact details, their balance, and the [interest rate](https://www.financedigest.com/ecb-needs-to-keep-interest-rates-sustainably-high-to-combat-inflation-lagarde.html "ECB needs to keep interest rates ‘sustainably high’ to combat inflation – Lagarde") of their account. However to a marketer, other variables may be key in helping determine different products or services that could be offered (for example a special rate on a child’s savings account could be offered to customers that are also parents).

**Historical data**

Another [key principle of GDPR is that data](https://www.financedigest.com/cbd-gummies-market-current-scenario-and-industry-growth-forecast-with-major-key-players-data-2030.html "CBD Gummies Market| Current Scenario and Industry Growth Forecast with Major Key Players data 2030") shouldn’t be held for “longer than is necessary”. CMOs need to work with their data and IT counterparts to define an acceptable timeline and an archiving and research process that fully supports business forecasting and [marketing planning](https://www.financedigest.com/analysis-energy-market-turmoil-shakes-europes-green-power-plan.html "Analysis: Energy market turmoil shakes Europe’s green power plan") needs.

**Profiling**

For marketers, profiling is a crucial tool in the armoury, facilitating more relevant and targeted communications, better [market segmentation and a more accurate way of aligning products](https://www.financedigest.com/chondroitin-market-overview-analysis-by-top-players-product-segments-market-size-and-leading-key-players-2022-2029.html "Chondroitin Market Overview & Analysis by Top Players, Product Segments, Market Size and Leading Key Players 2022- 2029") and services to customer demand. The use of personal data in profiling is a new condition under Article 4 of GDPR. Profiling isn’t banned under GDPR, but there are certain conditions that need to be met to enable it.

Transparency is key is to ensure that [consumers are aware](https://www.financedigest.com/demand-for-automotive-radiator-market-driven-by-shifting-consumer-perceptions-and-growing-awareness.html "Demand for Automotive Radiator Market Driven by Shifting Consumer Perceptions and Growing Awareness") of how their data is being used. They need to have the right to object to their data being used for profiling and the process of objection needs to be easy. This information should be clearly set out in the privacy policy.

Any algorithms used for profiling need to be fair and unbiased and finally, it is important that profiling doesn’t “significantly affect” the [consumer](https://www.financedigest.com/from-in-store-to-online-how-the-pandemic-affected-consumer-behaviour.html "From in Store to Online: How the Pandemic affected Consumer Behaviour") in a negative way. For financial services organisations, this is a difficult issue as profiling could be used to determine, say, a more favourable interest rate being given to one consumer over another.

This is a complex area. You’ll need to work closely with credit reference agencies, media agencies and internal [data science](https://www.financedigest.com/crowdsourcing-of-data-to-drive-the-life-science-market.html "Crowdsourcing of data to drive the Life Science Market") and legal teams to ensure that any profiling undertaken meets GDPR standards.

**Database usage by IFAs, branches or other intermediaries**

In the [banking and finance sector](https://www.financedigest.com/how-effective-talent-management-could-disrupt-the-retail-banking-sector.html "HOW EFFECTIVE TALENT MANAGEMENT COULD DISRUPT THE RETAIL BANKING SECTOR"), personal data is often processed or utilised by organisations with whom the consumer would not necessarily associate with your organisation. This could be an [insurance company that underwrites one of your products](https://www.financedigest.com/insurance-products-growing-in-importance-in-2021-and-beyond.html "Insurance products growing in importance in 2021 and beyond"), a branch with a different brand name or a credit referencing organisation that assesses creditworthiness. Once again, transparency is key here. The [consumer needs to know](https://www.financedigest.com/money-orders-vs-checks-what-you-need-to-know-as-a-consumer.html "Money Orders vs Checks: What You Need to Know as a Consumer") the organisations with whom their personal data will be shared, so this information should be clearly set out in the privacy policy. If data is sold on to third parties, then additional opt-in consent must be obtained and the third party(ies) clearly named.

In summary, GDPR is much more than an IT and data compliance issue. CMOs need to be on the front foot with GDPR; championing the [data that is needed to drive successful](https://www.financedigest.com/how-alternative-data-drives-e-commerce-success.html "How Alternative Data Drives E-commerce Success") marketing programmes and ensuring that there is a sustainable customer database for CRM.


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