ESAs publish final report on big data impact 16 March 2018Paris Reporter: Brian Bollen
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The Joint Committee of the European Supervisory Authorities (ESAs) has published its final report on Big Data analysing its impact on consumers and financial firms.
The report results are from a discussion paper on the use of Big Data by financial institutions, which was issued on 19 December 2016. The deadline for replies to that paper was on 17 March last year.
The principal objectives were to map the big data phenomenon and assess its potential benefits and risks, to raise awareness among consumers of their rights, and to raise awareness of financial institutions of their obligations and encourage the adaptation of good practices on big data.
A total of 68 responses were received. Public responses are published on the European Securities and Markets Authority’s (ESMA) website.
In the overview summary, the ESAs said that respondents generally agreed with the tentative definition and description of the big data phenomenon provided in the discussion paper, while highlighting that any definition of a fast evolving phenomenon such as big data should remain flexible to accommodate inevitable adjustments.
Respondents noted that the accuracy of the data used in big data analyses is of utmost importance and expressed concerns regarding practices that do not guarantee the accuracy of the data collected, such as the gathering of data from social media, a recurring concern.
A number of respondents also highlighted that the growing use of big data could increase the breadth of the consequences of cyber risks attacks.
Overall, the ESAs said they have found that while the development of big data poses some potential risks to financial services consumers, its benefits currently outweigh these and that in any event many of the risks identified by the ESAs are mitigated by existing legislation, including second Markets in Financial Directive.
The report concludes that big data brings many benefits for the financial industry and consumers, such as more tailored products and services, improved fraud analytics, or enhanced efficiency of organisational internal procedures.
The ESAs said that they will continue to monitor any developments in this area in the coming years and that they will invite financial firms to develop and implement good practices on the use of big data.
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