“While there is a strong case for the sharing of customer exit data among firms, there are also ethical and risk issues that should be addressed before a framework is put in place.”

In this blog series, we have looked at issues pertaining to data analytics, data sharing and technology as they pertain to the creation of a customer exit data strategy for financial institutions.  While there is a strong case for the sharing of customer exit data among firms, there are also ethical and risk issues that should be addressed before a framework is put in place.   

In the wake of the General Data Protection Regulation (GDPR) in Europe and the recent increase in data privacy concerns, financial institutions should consider what data they share and how they share it, meeting both compliance requirements and ethical considerations according to internal policy and values.  

The considerations as to when to share exited customers’ data are generally dictated by internal risk criteria and policies, along with external regulation. Financial firms should clearly differentiate between customers who are confirmed to have committed a crime and those who simply have a high risk rating but have not committed a crime.  Different risk ratings among banks who are sharing their lists of high-risk customers could unfairly disadvantage customers and potentially lead to unfair customer outcomes. This is a key focus for the Financial Conduct Authority (FCA) in the UK and for other regulatory bodies worldwide.  

Devise a comprehensive, balanced customer treatment strategy

The sharing of an individual’s data is risky; additionally, many individuals could opt out under GDPR. Even internal cross-jurisdiction sharing could lead to unfair outcomes, if a customer’s actions in one country were perfectly legal in one but not another. These are all areas firms should review when considering data sharing. Finally, a financial firm should develop a process identifying steps a customer could take to better understand and challenge a decision. This prevents scenarios in which a customer may mistakenly end up on a grey-list and never be able to get off it.  

Implement a phased roll out

As these issues primarily affect individuals rather than corporate customers, we would propose financial institutions, at least at first, focus their energies on corporate customers – particularly as there is a higher cost to investigating, onboarding and exiting such customers.  Once a sharing framework and appropriate technology solutions are in place, banks and other financial institutions can then evaluate an exit data strategy for individuals.   

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