Tech giants leveraging customer data

Tech Giants Amazon, Google, Apple, Facebook and Microsoft, Spotify, Instagram, Netflix, are reworking on how businesses could leverage customer Data. They are taking a larger pie of the Indian financial services sector and the Reserve Bank of India is worried. In its Financial Stability Report, the central bank said big tech companies offering financial services pose risk to financial stability as their complex intertwined operational linkages with financial institutions could lead to contagion effects and potential anti-competitive behaviour.

What is At Risk – How Marketing Data is Currently Used? There’s a lot at stake, which includes the way companies use algorithms and technology to track individual users. Take Google for instance, if they enhance their privacy by masking customer data, businesses must then go through Google to purchase ads, which ultimately means gaining access to targeting data to send those messages to a designated user base.

Propelled by Big Data, these online ads have previously helped companies target people with characteristics of someone to whom the content and promotions are likely to be of interest. Big Data is the process of buying data from a third-party provider, collecting the online activity, purchase history, social media content and more to identify people that are most-likely interested in the promotions a company has to offer. Big data is simply a collection of data that may be assessed to disclose patterns and trends. It is used by several multinational companies to filter the data and business of various companies.

There are specialized agencies who process the IP address and cookies to do the marketing by knowing the users interest, preferences, pattern and buying behaviours. After this the big data helps companies to understand their customer's needs and wants and also enables a business to engage in a real-time, one-on-one conversation with consumers.

It is the second time within a fortnight that RBI has expressed its concerns over Big Tech's functioning and operations in the financial sector. Last year too, the central bank raised red flags saying that Big Tech companies are likely to become dominant players in the financial services sector in the country, and pose a threat to existing banks, payment companies and non-banking financial services players.

It also stated that these companies would bring their own set of challenges to regulators in advanced and emerging markets. Regulators and supervisors face a challenging balancing act between innovation-friendliness and managing risks to financial stability, the central bank said in its Financial Stability Report.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA