Data Protection Day is on the 28th of January, and with new EU regulations on the horizon—namely the General Data Protection Regulation (GDPR), which is being implemented on the 25th of May this year data protection is something that can’t be ignored.
To prepare your firm for the changes that lie ahead, we’re answering a few of the burning questions financial firms have about the implementation of GDPR and how this will affect marketing to prospective clients.
Why is data protection important?
In recent years, cyber attacks and data breaches have been on the rise. One notable attack you may remember impacted the NHS in May 2017. A computer virus was released worldwide (spreading to more than 150 countries), encrypting data and demanding ransom from those affected to get their data back. This attack affected computer and telephone systems across some areas of the NHS, reducing services and creating major disruption.
Unfortunately, these attacks are not uncommon. According to a survey done by IT Governance, in December 2017 alone, 33.8 million records were leaked following various data breaches and cyber attacks targeting several organisations. This highlights that data protection is a serious issue for many organisations and needs to be combatted.
As a financial firm, data is one of your most prized assets, so protecting this data should be top priority.
What does data protection have to do with marketing?
While the concept of storing an individual’s data to use for marketing purposes has been around for a while, due to advances of computer systems in recent years it is now possible to possess a comprehensive database of an individual’s likes and dislikes, habits, and contact information from their online presence. In fact, it’s so sophisticated now that computer systems can tailor and develop more customised campaigns for individual consumers using this data. From tracking email engagement to monitoring website traffic, collecting and using data for marketing purposes is important for a financial firm to grow.
Because of advances like these, marketing your firm requires tons of data in order to accurately measure and target the correct audience, stay relevant and produce material that is up to date and captivating for prospective clients. It is integral that this data is not corrupted and is dealt with responsibly and protected by the law. As a marketing agency, we are responsible for ensuring that the data we collect and use is done so correctly according to legislations put in place. This year, new EU regulations means data protection is becoming more stringent with the introduction of the EU GDPR in May 2018, replacing and superseding the 1998 Data Protection Act.
What is GDPR?
The new EU regulations called the General Data Protection Regulation (or GDPR) aims to give control back to EU citizens and residents. It will protect the privacy and rights of the individual and enable people to access information pertaining to what data is held about them and how it’s being utilised. In layman’s terms, when it comes to marketing, companies will have to make their intentions clear if a consumer is opting in to mail lists, including what that consumer will get when they do opt in. Businesses also have to make it easy for a prospect to opt out of mailing lists if they so wish. Additionally, companies can no longer keep an individual’s information on file if it is not legitimately needed after a period of time.
Not only will these stricter rules protect individuals, but they will result in a decrease in data breaches by encouraging organisations to look after their data more carefully.
But what about Brexit? As the new EU regulations come into action at the end of May and exiting the EU will take much longer than that, these new EU regulations will still need to be adopted. Furthermore, the UK Government has announced plans to adopt this legislation UK-wide, even after Brexit. It is integral that companies comply with the new legislation, as failure to do so will result in a maximum fine of €20 million or 4% of the company’s annual global turnover.
If you are looking for some more in depth information on GDPR, then please check out our blog about what GDPR is and how it may affect you.
How will GDPR impact marketing for your firm?
With the new GDPR in place, marketing will get harder in a variety of different ways. The introduction of the new EU regulations means that there will be less data easily and readily available, as people can opt out of their information being used much more easily.
Below are a few additional effects GDPR will have on your firm’s marketing going forward:
The cost of marketing data will rise
GDPR will make accessing marketing data more difficult for firms, thus more expensive. Businesses will have to devote more resources to comply, and exposure to lawsuits and liability will increase. Meanwhile, there will be less data available if consumers opt out of their information being used.
Reaching the masses becomes harder
As more prospects will opt out of their information being stored and used by your firm, there will be less data available to leverage—for example, your database will likely shrink, which means you’ll have less prospects available to email. Think of your current market as a small pond with 1,000 fish in it—as it stands, it’s easy to catch fish with such a volume in a small area. After GDPR comes into play, however, this number will decrease from 1000 fish to 10, for example. This will make catching fish (getting the content details of prospects) a much harder job, requiring more resources and time.
The competitive edge shifts back to larger companies
Having a strong data pool available means that smaller companies can better compete with larger companies. However, the introduction of GDPR could mean that larger companies will have the edge.
With more resources available in order to comply with the legislative changes, and more funds available to collect new data going forward, larger financial firms are in a better position than smaller companies. This means that smaller companies will have to put more into their marketing efforts than ever before, in order to compete with the big guys.
What should your firm do?
As marketing for your business will become harder, you will need the help of professionals to make sure your marketing efforts don’t go stale and become ineffective. Here at Propero, we are up to date with how to be GDPR compliant in regards to marketing and can advise our clients on what’s best to do to remain competitive and keep getting