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Privacy Managing the Balance of ValueCACR Privacy & Security Workshop
Peter CullenRoyal 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 – 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
Courtesy Of ExperianCourtesy Of Experian
Trust Flexible In formation Use
Law
Self Governance Broad Use/Secondary Use
Industry Codes Data Warehouses
Self Restraint Database Marketing
Value Passive Data Collection
Public Reaction
Economic Deflator
Escaping
Economic
Activity
To establish a consistent, coordinated, client centric approach for information management and use across RBFG
Our Goal:
Built on Client preferences & choice
The Necessities….
Privacy has two fundamental components:
• Custody of information
• Use of information
• The Basics– Consent/Disclosure– Choice– Control– Respect
The Success Factors….
Alignment of
• Business Management• Information Management• Data Management• Alliances Management• Out Sourcing Management• Human Resource Management
Key Challenge - Alignment
Customer Value Balance
Consent / Use
Consent / Use Opt -OutOpt -Out WebWeb TrainingTraining AlliancesAlliances Commun.Commun. SecuritySecurity MonitoringMonitoring Etc.Etc.
BUSINESS MANAGEMENT
CUSTOMER INFORMATION MANAGEMENT
HUMAN RESOURCE MANAGEMENT
RISK MANAGEMENT
Customer Information Management
Data Management
Legal &Ethical
Boundaries
Customer Relationship
ClientPreference
& Choice
CapturingData
CapturingData
Delivering & Presenting
Critical Data
Delivering & Presenting
Critical Data
Identifying Critical
Data
Identifying Critical
Data
MeasuringResults of Data
Use
MeasuringResults of Data
Use
Using Data forMarketing and
Sales
Using Data forMarketing and
Sales
Sales Performance Cross-sales Customer Relationship Expansion Marketing Effectiveness Critical Success Factors Customer views as value added
Optimizing Marketing Programs Linkage to sales Putting data into action Driving sales Performance
Simplicity The right data To the right people At the right time Easy to use Keeping data
current and relevant
Just the right data Data Sources “How to” Capture data Who captures the
data Client preference/
privacy
Customer Prospect Competitive
“The Customer Information Management Cycle”
How We Manage Privacy
• 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
ActionableAnalytics
Client potential
LTV, NPV
Predictive modelsby Product
Client attrition
Channel preference
Other...
LifestageSegmentation
Individual currentclient level Profitability
Client Level riskProduct Level riskExternal riskAppended external dataShare of walletOther...
Actionable Models
The Business Architecture
ClientProfiles
Retention Management
MarketingOffers
MarketingOpportunities
AccountDecisioning
Recoveries
Credit Granting
MIF/EDW
ClientDecisionEngine
CampaignManagement Face to Face
ABM/Commercial Kiosk
Royal Direct
PC/Internet Banking
Direct Marketing
---
---
---
Service Delivery Environment
ClientStrategies
Actions /Tactics
Client Feedback
CLIENT DECISIONSTRATEGY TEAM
Strategic and Tactical Analytical tools
Today’s Bank Experience
• Customer information is maintained on different systems with no consistent customer identifier.
• Difficult to design product / service offerings with only a piece of customer profile.
• 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.
Multiple Touch Points
PFS ACTIONDIRECT
BUSINESSBANKING
ROYALTRUST
RBC DS RBCINSURANCE
TelephoneBanking
Branch
Call CentreCellularPhone
PC Banking
Telephone
RBFG’s “touch” issue with it’s customers:
Client Preference & Choice
• 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
• 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
Client Preference & Choice can:
Personal Digital
Assistant (PDA)
TelephoneBanking
CellularPhone
Call Centre
PFSACTION
DIRECT
BUSINESS
BANKING
ROYAL
TRUST RBC DSRBC
INSURANCE
Enterprise Customer InformationManagement
RoyalBank
ActionDirect
RoyalTrust
RBCInsurance
Customer / Service Information
Mod
els
Pri
vacy
Shi
eld
Pro
fita
bili
tyC
usto
mer
B
illi
ng
Cus
tom
er V
iew
sEnterprise Client Registry
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?
BusinessModel
ApplicationArchitecture
Data Management& Architecture
Technology InfrastructureArchitecture Scaleability
Robustness
Open standards Backup & Recovery
Business Processes &Requirements Usability/Navigation Consistency
Meets the current & future strategies
Informationsecurity Due Diligence
Privacy &Security
Technology Due Diligence Framework
“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