Response to discussion Paper on innovative uses of consumer data by financial institutions

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1. In what capacity (i.e. consumer, financial institution, technology providers, etc.) have you had experience with innovative uses of consumer data?

As a technology provider, consumer and employee of consultancy business and direct employee of financial institutions in multiple countries within the EU.

2. Based on your knowledge, what types of consumer data do financial institutions use most?

1. Credit performance data which enables the financial institution to understand the debt burden of a consumer and the consumers' capacity to service this and to verify the consumers identity by exception
2. Publicly available data (e.g. electoral roll data, court data for (e.g.) bankruptcies, arrangements with creditors or other court orders)
3. Previous search data maintained by credit bureau with respect to former credit search enquiries by financial institutions and others

3. Based on your knowledge, what sources of consumer data do financial institutions rely on most?

1. Credit performance data which enables the financial institution to understand the debt burden of a consumer and the consumers' capacity to service this and to verify the consumers identity by exception

4. Based on your knowledge, for what purposes do financial institutions use consumer data most?

Credit assessment both of the binary decision of whether or not to lend to a customer and also to measure a specific consumers affordability (e.g. minimum amount of monthly spending required to service existing credit commitments) and credit performance (e.g. providing a dependant variable for regression analysis to build credit scores and policy rules to determine which consumers to and not to lend to)

5. How do you picture the evolution of the use of consumer data by financial institutions in the upcoming years? How do you think this will affect the market?

More and richer data being available, including OSINT and checking account data for both existing 'legacy' lenders and 'challengers'

6. Do you consider the potential benefits described in this chapter to be complete and accurate? If not, what other benefits do you consider should be included?

Reduced financial crime from the better understanding of consumers; increasing the number of dimensions of data in which a customer is known leading to better decisions; expansion of market for financial products (both lending and deposit-taking) across EU borders

7. Are you aware of any barriers that prevent financial institutions from using consumer data in a beneficial way? If so, what are these barriers?

The principles of reciprocity within the UK credit bureaux (via the Standing Committee on Reciprocity) prevent the display of consumers data to a third party; this means that many consumers who might wish to use services of a lender to consolidate debt must do so with significant effort which could be reduced to near-zero in the event of this data being available. In addition, the lack of cross-border credit bureaux means that a whole-of-EU market does not strictly speaking exist. In addition, financial institutions only providing data either weekly or monthly to the bureau means that data is not as complete as it may be.

8. Do you consider the potential risks described in this chapter to be complete and accurate? If not, what other risks do you consider should be included?

The data protection risks in the sector are regularly overplayed in a way that restricts competition.

9. Have you observed any of these risks materialising? If so, please provide examples.

Often: see Experian plc (in particular).

Name of organisation

Credit Risk Models Limited

Please select which category best describes you and/or your organisation.

[Provider of ancillary services to financial institutions (e.g. IT, data processing, data aggregation, etc)"]"