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Sunday, 23 March 2014

Are you still the owner of your own life and, as a consequence, your electronic trail? Or is in the end all your personal data subject to sales to the highest bidder?!

The more often a certain resistance is hit
The weaker it gets…
Todd Harrison – Founder of Minyanville

Last week, something relatively extraordinary happened in The Netherlands: there was commotion about the privacy of Dutch citizens. In this case, it were customers of the largest bank in The Netherlands, ING Bank.

The commotion emerged, after ING announced that the bank was planning to start a so-called ‘big data’ pilot soon. During this pilot, the full payment transaction data of a small group of selected customers –approximately 1000 – would get an in-depth analysis through data mining techniques, to deliver ‘big data’ on their savings and payment behaviour. One of the senior officials of the bank had announced some details of this plan to Het Financieele Dagblad, during an interview.

This big data, coming out of the payment transactions of these customers, would be used to enable targeted advertising for certain banking and insurance products and other special offers. Not only by the bank itself, but also by commercial partners of the bank – of course, after the explicit consent of the account holders.

By doing so, the bank hoped to achieve a win-win situation: at a fair price, the bank could offer populations of (potentially) interested customers to its commercial partners. The bank’s customers, on the other hand, could get tailored advertisements for products in which they would be interested and at an interesting discount. When the pilot would be a success, the bank would enable the same services for much larger groups of customers, in due course. “Everybody happy”, ING reckoned.

Things went…  a slightly different.

After the bank branches opened their doors and telephone lines last Monday, 17 March, the counter clerks and the call-centre employees were ‘flooded’ with furious customers,  who demanded an explanation about the subject that ING “would sell their personal payment transaction data ‘to the highest bidder’”.

At first, the bank tried to sweet-talk itself out of the situation, by emphasizing that their customers’ transaction data would never leave the bank: the bank would only be a “postillon d’amour” (i.e. an intermediary messenger) between the commercial party and the customer, but the commercial party would never receive the payment transaction data itself. Later, during last week, ING published a statement that this plan would be postponed until “a much, much later date”. Subsequently, the bank licked its wounds.

It was the second time in less than a year that a similar, bold plan was torpedoed by angry consumers in The Netherlands.  

In May, 2013, the Dutch clearing and settlement organization for the Dutch bank industry, Equens, had been planning to sell its database of 2.2 billion payment transactions to interested companies for marketing purposes. However, this plan had been quickly withdrawn, as a consequence of infuriated Dutch citizens.

The main difference between the Equens plan and that of the ING, was that ING would NOT sell the physical payment transaction data itself, while Equens did plan to do so.

Nevertheless and in spite of the fact that Equens and ING had encountered such angry reactions by the general public, only days after the ING plan was withdrawn, the Rabobank presented its plan to make usage of the big data that the vast amount of payment transactions would offer. Here is a snippet from

The Rabobank sees opportunities in the usage of in-depth analyses upon the  payment data of customers. Through these analyses, the bank could offer better service to their customers. ‘This is about deepening the relation between the bank and its customers. There are few boundaries in this. I would take the risk of running into these boundaries’, according to executive Rien Nagel.

Nagel emphasizes that the Rabobank is not planning to couple this data with third parties. “To that idea, I say categorically ‘no’. This is an area to stay far away from”, according to Nagel.

Within the banks, there are generally two groups of people:
  • the people who invent and/or endorse such plans and see the enormous commercial advantages of those plans for the bank, as well as its customers and its commercial partners;
  • the people, who receive the angry customers on their telephones and counters, and really don’t understand a. how the bank could invent such weird plans and b. that they were not informed in advance;

The first group consists generally out of higher ranked officers and ICT engineers without much genuine business knowledge, while the second group of people consists of people with ‘their feet firmly in the mud’ of day-to-day  business. These groups within the same bank (!) are almost living in two separate worlds and don’t understand each other… at all!

And even more worrisome, the first group doesn’t have the slightest of clues what all the fuzz was about?! They feel angry and misunderstood by their ‘clueless’ customers, while they were genuinely trying to help them in the first place(and themselves in the process).

Everybody and their sister knows that companies like f.i. Facebook, Microsoft, Google, LinkedIn and Twitter use their gargantuous amounts of detailed customer transaction data and additional information for targeted adverts and also for in-depth analyses. In many cases these analyses are sold to partners and business relations, in return for (eventually) large amounts of money. This is, as a matter of fact, their main business model and that is where they make most of their money with.  

Many people also know that these particular companies skim (and at occasions get across) the edges of worldwide privacy and data manipulation regulations. If people would thoroughly read the ‘agreement terms for software usage’ of such companies, when they install their software and use their smartphone apps, the intensive care rooms of city hospitals would be flooded with shocked users. Luckily, few people actually read those statements.

Particularly these (and other) social media companies act sometimes like naughty children: they try and try to do forbidden things, until their mommy warns them or smacks them on the fingers. Then a few moments later, they try to do the same forbidden things again… These companies only respond to billions of dollars and euro’s in fines and other harsh penalties. Still, many citizens simply accept this and use their software anyway.

However, with the aforementioned banks, the people responded differently.  Here is – perhaps – the explanation:

Although it would make your computer life much harder, people can ultimately say ‘no’ to LinkedIn, Facebook, Twitter and even Google. There are sufficient alternatives around, which offer almost the same service, but don’t play ‘Jedi mind tricks’ with you, when it comes to your personal privacy.

However, in The Netherlands, it is impossible to live without a bank account.

People without a bank account simply can’t have a job, as no company pays them in cash or checks anymore. Besides that, the Dutch Internal Revenue Service would see people without bank accounts as probable ‘tax evaders’ and frauds. Even the ‘tramps and hobo’s’ in The Netherlands need a bank account in order to receive their welfare payments. You just can’t live without a bank in The Netherlands. Really, you can’t…

And when such a bank, as your ‘partner of ultimate trust’ is threatening to ‘throw your data on the street’, people finally do respond, where they remained silent in case of privacy breaches by f.i. Facebook or Google.

In this case, ING could justifiably state that they were understood falsely by the general public and that it was never their intention to sell the payment transaction data itself. Nevertheless, the damage was done anyway. What people do accept from Facebook and Google, they don’t accept from their bank.

Still, Todd Harrison, the very wise and savvy founder of Minyanville, states occasionally that ‘the more times a certain resistance level is tested, the weaker it gets’. Although Toddo uses this wisdom on support and resistance levels for stock and index rates, it is also true for other kinds of resistance.

Like in the case of the public’s resistance against the usage of big customer data within the banks: 
  • Equens tried it and got bitten…
  • ING tried it again, in a slightly different manner, and got bitten too.
  • However, Rabobank tried it also, again in a slightly different manner, and seems to get away with it. 

And in one or two years, the Dutch people will have become so familiar with the idea that their 'big data' might be used for commercial purposes, that the banks can refurbish their original ideas and use the real payment transaction data for targeted marketing anyway.

This brings me to the more urgent question behind all this: are people still the owners of their own life and of the electronic trail that they leave behind? Or should people just get used to the thought, that they are like birds in a cage, which are watched all day long by anonymous people?!

From the moment that they are awake, until the moment that they fall asleep, people are leaving an electronic trail of:
  • Identification data and social security data from their passports and ID-cards;
  • Telephone, GPS and Bluetooth signals from their smartphones;
  • License plate data from their cars, which are automatically registered by smart camera’s on the road, in parking garages and (even) on parking meters, where people should mandatorily enter their license numbers;
  • Camera data from the ubiquitous surveillance camera’s, which are almost on any corner of the street and in any building;
  • Payment data from their debit and credit cards and telebanking programs;
  • Live images from their webcams: not only for their friends, but also for anonymous civil servants, who are candidly watching these images in order to find 'terrorists';
  • Log in data from their computers, iPads and smartphones, which are registered on every wifispot, whether people want this or not;

People simply can’t switch off their electronic trail anymore and cannot withdraw from; it is always there to follow them, whether they want it or not. 

And when their trusted banks then finally ‘threaten’ to sell their most intimate data – which is their payment data – to other parties, even the most credulous Joe Sixpack suddenly feels a sense that ‘enough is enough’. 

Which – of course – will not be enough to stop these plans in the end…

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