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

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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

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usto

mer

B

illi

ng

Cus

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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