May 17, 2018
Banking & Financial Services
There is a misconception that GDPR is all about data security and compliance policies alone. However, GDPR impacts organizations in more ways than that. It redefines how organizations collect, distribute, process and remove data, practice data privacy, and leverage third party data. It also examines the level of sensitization organizations have about customer and employee data. There is more on this in ICO’s Overview of the General Data Protection Regulation.
Most discussions about GDPR highlight that GDPR non-compliance is likely to result in heavy fines to the tune of 4 percent of annual turnover or €20 Million, whichever is higher. But, fines and penalties are certainly not the sole objectives of GDPR. It is actually focused on creating a trusted business environment for digital economy to thrive and grow. It gives organizations an opportunity to modernize their systems and improve their data protection processes instead of getting continual notoriety for flouting them. In short, GDPR can be visualized as a framework for the digital transformation economy where data is considered its new currency, business asset, innovation accelerator, and the new ‘oil.’ In that sense, a business is not only a rightful owner of the data it is processing but also has access to accurate, relevant and timely data on which to base its critical business decisions.
Digital Economy Mandates New Regulations
Digital economy today sees huge influx of data in various forms, volumes, and velocity from devices all around. Big Data has emerged as a real basis for making decisions, predicting user behavior, and formulating business strategies through business analytics and AI. However, there is a big question mark on trust over personal data held by governments and organizations.
The demands of global digital economy requires organizations to actually get organized behind the scenes, earn their customers’ trust, and become the entity that respects personal data. Besides, the legal implications, responsible data handling is a basic principle of good business upkeep and GDPR regulations have provided one such critical opportunity to organizations.
GDPR is going to change the way organizations operate and bring in a new perspective and approach to data that they use. Some of these changes will lead to optimization opportunities but there will be social benefits too. When organizations are GDPR-compliant, it can boost their public image and help them win customer trust and loyalty.
Holding the Mantle of Trust and Transparency High
Keeping in mind the extraordinary benefits of Big Data and digital innovation, organizations need to prioritize people and trust above everything else. Consumer behavioral research shows that millennials are extremely vigilant about and cognizant of how their personal data is used by organizations.
When organizations are able to use data more openly and smartly, it will create unprecedented business growth through more effective product development, improved customer experience, and more contextual, personalized marketing. When customer trust and confidence in the organization are added to the mix, they can make it extremely powerful.
An Opportunity Beckons!
Apart from restoring and nurturing trust in digital economy, the GDPR framework offers several significant opportunities to organizations around the world. It can steer organizations toward upgrading their current data and security practices crucial to our hyper-connected world. Organizations can, in fact, obtain more flexible and even more expansive access to their customer data and drive more favorable business outcomes. Without the distraction of being constantly drawn into defending their position on the use of personal data, organizations can be more focused on achieving business results and take their customers along on the journey. Finally, they can be better positioned for future as more advanced digital applications emerge.
When it comes to practice, GDPR mandates involvement of security from the very beginning of any digital transformation project. When security is incorporated into the product by design, it would have far-reaching benefits in markets where analytics and AI are key to tangible business outcomes. This can play an important role in reinventing business models or optimizing existing processes, especially customer-facing operations.
Surfing the Marketing Waters
Consider the likely impact of GDPR compliance on marketing. One of the most important changes brought in by GDPR for marketing is that ‘implied consent’ or ‘soft opt-in’ will no longer be an option. Prior to GDPR, ‘implied consent’ meant that organizations can email a person and that person had the option to opt-out of receiving emails at the time of purchase or contact. However, under GDPR, consent has to be explicit and the individual must opt-in as opposed to opting-out. Furthermore, organizations would now need to present evidence to support it.
The GDPR also offers an opportunity to marketers to start improving the quality of data held on their systems. They would have to refine their records, only retaining information from genuinely interested prospects thereby leading to enhanced personalization and efficacy of campaigns. When organizations place customer at the heart of their data collection and usage practices, two aspects of data become important: identification of both structured and unstructured data and revisiting the ways in which data is processed throughout its lifecycle. If this exercise is conducted rigorously in line with the GDPR principle of relevance, consent, and privacy, then, it is inevitable that organizations will uncover opportunities to optimize various customer-facing activities.
No one likes having their data misused or shared without proper consent; hence, if organizations can do everything to protect their customer data and grow their trust, then, it could be a unique selling point. So, apart from huge fines and compensation claims, there are certainly many business reasons for organizations to become GDPR-compliant. However, it does not mean that all data needs to have same rigorous governance. Organizations can drive simplified and differentiated governance based on the nature and frequency of use of data. For example, less critical and single-use data can be governed more loosely.
The Road Ahead
The 25th May deadline for meeting GDPR requirements is just the beginning. Transitioning to a post-GDPR world will require compliance that is both ongoing and iterative. If done right, this is a genuinely beneficial activity that can improve your relationship with customers and drive highly successful marketing campaigns through superior and focused data collection and handling. Once compliance with GDPR is built into the culture of a company, marketers will be able to device ways to integrate their strategies with the efforts of other business departments and execute their vision in a holistic way. This will give rise to a win-win situation where customers will feel safe and secure while sharing their information and organizations will be able to make the most of that information due to superior data quality.