Can you benefit from the General Data Protection Regulation (GDPR)? With the regulation set to bring about fundamental changes to the rights that people have over how their personal data is processed, it is causing the UK financial advice industry a lot of work and, seemingly, a lot of concern.
There are a few factors behind this. Fundamentally, people do not like change and the financial services industry has been subjected to more change than most over the past decade. In the aftermath of the 2008 financial crises, a tsunami of regulation has followed. Given that GDPR is not a financial services specific regulation, it is easy to ask, why always me?
We’ve already had MiFID II this year, so another piece of sweeping regulation is hardly to be welcomed, especially if it doesn’t pertain directly to your industry. Regulatory fatigue is a real thing.
Yet every cloud has a silver lining and there is plenty for financial advice firms to take advantage of in GDPR. The regulation is coming after all, so why not take the positives?
- Boost the quality of your data
The better the quality of your data, the more value it will mean for your business. Processing inaccurate and useless data costs your firm time and money. GDPR prohibits the processing of inaccurate data and makes firms think carefully about what they do and do not process. By following the regulation, firms can overhaul their data and data process to ensure that they are operating with accurate and valuable data.
- Drive efficiency
With accurate, relevant data, firms will have a much better understanding of their clients and prospects, enabling them to be more targeted in their client and prospect communications and over what data is stored. Building in automated processes, which ensure efficient and consistent processing of data, will also have the additional benefit of time and cost savings.
- Reduce costs
GDPR encourages firms to go paperless, since you will need to provide evidence, where necessary, of your processes. Indeed, the regulations states that it is best practice to utilise a secure, online client portal for the receipt and submission of documents with a client. If documents go missing in the post, it’s considered to be your fault. The upshot of this for advice firms is no more postage costs and no more printing costs.
- Increase transparency
Transparency has been a prominent word in financial services’ vocabulary since the global financial crises rocked the industry in 2008. Regulators have been increasingly keen to shine a flashlight on monetary transactions to better understand how firms operate and how money is moved. With improved data accuracy and processes, firms will be far more transparent in how they operate and will be able to offer this transparency to their clients, too, via secure online portals.
- Increase the value of your business
One of the major headaches that purchasing firms face when integrating a new business into their own system is merging the data. With cleansed, accurate data, this will really highlight the value that is inherent within a firm.
- Get ahead of the competition
The firms that will fail under GDPR are those that do nothing. They will bury their heads in the sand and carry on as normal, processing all their existing data and reaching out to contacts as they do now. GDPR requires some thought and planning – those firms that do this will have an advantage. It only takes one complaint from an individual about unwanted contact for the regulator to become involved. Punishments could be made public, so there is reputational as well as monetary risk in non-compliance. As Warren Buffet once observed, “Only when the tide goes out do you discover who’s been swimming naked.”