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Privacy
Managing the Balance of Value
CACR Privacy & Security Workshop
Peter Cullen
Royal Bank of Canada
Nov.10th, 2000
Objectives
• Why Privacy is Important - Legislation or Not
– The RBFG imperative
• The Customer Centric View
• How Royal Bank Approaches
–
–
–
–
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Customer Management
Data management
Information management
Customer choice management
Alignment Management
• Information Management – Roles and Challenges
Objectives
• The Necessities
• The Success Factors
• The Customer
• The Challenge
So What’s The Big Deal?
Reputational Risk - or Privacy Firestorms
“ DoubleClick erodes 70% of Market Value”
“US Bancorp fined $3 Million For Selling Data On
Customers”
“State Attorneys Investigate 6 Banks for Possible Violation
of Privacy Laws”
“There is mounting evidence of an increase in banking
practices that are at least seamy, if not downright unfair
and deceptive”
John Hawke Jr., OCC
So What’s At Stake?
Environmental Assumptions
• Robust information use is a prerequisite for
success in a service economy.
• Consumer trust is a necessity for
maintaining success in a service economy.
Value Balance Of Interests
Trust
Law
Self Governance
Industry Codes
Self Restraint
Value
Flexible In formation Use
Broad Use/Secondary Use
Data Warehouses
Database Marketing
Passive Data Collection
Public Reaction
Economic Deflator
Escaping
Economic
Activity
Courtesy Of Experian
Our Goal:
To establish a consistent, coordinated,
client centric approach for information
management and use across RBFG
Built on
Client
preferences
& choice
The Necessities….
Privacy has two fundamental components:
• Custody of information
• Use of information
• The Basics
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–
–
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Consent/Disclosure
Choice
Control
Respect
The Success Factors….
Alignment of
•
•
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•
•
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Business Management
Information Management
Data Management
Alliances Management
Out Sourcing Management
Human Resource Management
Key Challenge - Alignment
Customer Value Balance
Consent /
Use
Opt -Out
Web
Training
Alliances
Commun.
Security
Monitoring
BUSINESS MANAGEMENT
CUSTOMER INFORMATION MANAGEMENT
HUMAN RESOURCE MANAGEMENT
RISK MANAGEMENT
Etc.
Customer Information Management
Customer
Relationship
Data Management
Client
Preference
Legal &
Ethical
Boundaries
&
Choice
“The Customer Information Management Cycle”
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Sales Performance
Cross-sales
Customer Relationship
Expansion
Marketing
Effectiveness
Critical Success
Factors
Customer views as value added
Identifying
Critical
Data
Customer
 Prospect
 Competitive



Measuring
Results of Data
Use
Capturing
Data
Optimizing
 Marketing
 Programs
 Linkage to sales
 Putting data into action
 Driving sales
 Performance

Using Data for
Marketing and
Sales

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


Delivering &
Presenting
Critical Data




Just the right data
Data Sources
“How to”
Capture data
Who captures the
data
Client preference/
privacy
Simplicity
The right data
To the right people
At the right time
Easy to use
Keeping data
current and
relevant
How We Manage Privacy
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•
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•
•
•
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RBFG Privacy Code
Customer Consent/Disclosure
Privacy Management Committee
Employees - Conduct and Code
Data Stewardship
Training
Communication/Awareness
Alliances
Assessment
Protecting Privacy A Customer Centric View
• Fosters a relationship built on trust
• Enables deeper insights into clients needs:
– Enhances customer confidence
– Develops customer loyalty by more effectively meeting
client needs across multiple points of contact
• Provides a competitive edge
What Are Consumers Saying?
• Loss of control over personal information - 80%
• Primary Concerns – Inappropriate Use of information
– Security of financial transaction
• But…It is an anticipatory concern
• Key reason sited for Non On-line buying
• Net-Users - more concerned
• Privacy Concerns to Privacy Activism
– refusal, false information, Opt-out
• The reality - On-Line Sales
– Only .2% of Total Operating Income - Canada
– Only .6% of Total Sales - US
What Does Life Look Like After CRM?
Client Preference & Choice
Anticipating Client Needs
Actionable Models
Client Level risk
Product Level risk
External risk
Appended external data
Share of wallet
Other...
Lifestage
Segmentation
Actionable
Analytics
Client potential
Client attrition
LTV, NPV
Channel preference
Predictive models
by Product
Individual current
client level
Profitability
Other...
The Business Architecture
Service Delivery
Environment
Strategic and Tactical
Analytical tools
Client
Feedback
MIF/
EDW
CLIENT DECISION
STRATEGY TEAM
Campaign
Management
Credit Granting
---
Face to Face
Actions /
Tactics
Marketing
Offers
---
Direct
Marketing
Client
Decision
Engine
Client
Strategies
---
ABM/Commercial
Kiosk
Retention
Management
Royal Direct
Marketing
Opportunities
Account
Decisioning
Recoveries
Client
Profiles
PC/Internet
Banking
Today’s Bank Experience
Multiple Touch Points
ACTION
DIRECT
PFS
BUSINESS
BANKING
ROYAL
TRUST
RBC DS
RBC
INSURANCE
RBFG’s “touch”
issue with it’s
customers:
• Customer information is
maintained on different
systems with no
consistent customer
identifier.
Telephone
Banking
• Difficult to design product
/ service offerings with
only a piece of customer
profile.
Branch
Cellular
Phone
PC Banking
Call Centre
Telephone
• Bank seen to be
communicating “at”
customers not “with”
them.
• Customer can simply click
and move today - we must
find another way to keep
our customers.
Client Preference & Choice
Client Preference & Choice can:
• create a mutually beneficial relationship provide the customer with their
enterprise-wide information while giving
the Bank an enterprise-wide view of the
customer
• customize to the client’s individual needs
Call Centre
• empower the client to define their
relationship with us;
– customer chooses contact,
relationship and business
aggregation preferences
– customer chooses which marketing
information to receive
– Bank can provide alerts to customer
re mortgage, investments or other
opportunities
Cellular
Phone
PFS
ACTION
BUSINESS
ROYAL
DIRECT
BANKING
TRUST
Telephone
Banking
RBC DS
RBC
INSURANCE
Assistant (PDA)
Personal Digital
Royal
Trust
RBC
Insurance
Customer / Service Information
Customer
Billing
Models
Action
Direct
Profitability
Royal
Bank
Customer Views
Enterprise Client Registry
Privacy Shield
Enterprise Customer Information
Management
Each Architectural Decision is Related to a
Customer Decision
• How does customer information from separate legal
entities get aggregated?
– Within the law?
– Within customer consent?
• What changes will be required to disclosure and
consent?
• What are the customer’s opt-out choices?
– Sharing of information?
– Modeling?
– Operational decisioning?
• How do you operationalize the customers choice?
• Where do Privacy filters get implemented?
– Before aggregation?
– Before operational decisions?
Technology Due Diligence Framework
Business
Model
Application
Architecture
Data Management
& Architecture
Technology
Infrastructure
Architecture
Meets the current
& future strategies
Business Processes &
Requirements Usability/
Navigation Consistency
Open standards
Backup & Recovery
Scaleability
Robustness
Information
security
Due Diligence
Privacy
&
Security
“Here’s a prediction you can take to
the bank: Within a decade, privacy
management will be one of America’s
great growth industries.”
The 500 Year Delta:
What Happens After What Comes Next
Jim Taylor and Watts Wacker
A new deal will be struck between consumers and
businesses regarding the use of personal
information, giving more control over its reuse to
customers. While government mandates may
enforce some portion of this new relationship,
businesses that do not embrace consumer control
before the government steps in will be relegated to
a low-trust, commodity position in the market.”
Institute for the Future's (IFTF) 10-Year Forecast
Conclusion
Privacy Is A Business Issue