The information banks keep about you and your spending and how it’s used

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Remember the last time you opened a bank account or applied for a credit card?

You probably gathered up your paperwork and handed over your name, address and payslips, hoping to be approved.

Given what we willingly provide them, you’d expect banks to have a certain level of information about us. But you’d likely be surprised to find out exactly how much they really know, says Professor Dimity Kingsford Smith, a corporate regulation expert from the University of New South Wales.

“They know our gender, they know our income, they know where we’re employed, they know who our kids are, they know what we spend our money on,” she says.

“[And] they could make a pretty good guess about how much tax we pay.”

That’s because every time we swipe a credit card, we’re handing across more information on our spending patterns — what products and services we buy, how much we’re spending and how frequently.The 7 steps that helped one single mother take control of her financesWith bills piling up, and more spending on the horizon, 41-year-old Laura finds herself in a financial hole. As a single mum with little support, how can she pull herself out?Read more

This makes the banks one of the few organisations with such a full picture of our personal information.

And right now, they have exclusive control over all this valuable data.

“They’ve been trying to sell us other products, say insurance, and that’s got them in a load of trouble as we now know.”

After the royal commission into banking revealed scandalous behaviour including fees for no service, hard-selling tactics and even fraud, it’s more important than ever to understand what they’re doing with all the information they have about you.

What do banks use the personal data for?

There are two types of data here, and the banks use each for different purposes.

The first type is personalised data, where customers are identifiable. The bank uses our individual personal and financial information, such as credit ratings, income, and debts, to assess our risk levels and decide whether to lend us money.Why we don’t trust banksAustralian customers have a very low opinion of banks’ trustworthiness. But a survey shows customers trust their own bank a lot more than the banking industry as a whole, Deloitte finds.Read more

Former banking executive Neil Slonim says they can also use this information to try to sell us other products.

“One of the many revelations from the royal commission was that banks need to be increasingly wary of making offers to customers that may not be in the customer’s best interest,” he says.

The second type is aggregated data. This is information the banks collect from a large number of customers, anonymising it by removing personal information.

The banks use this data to see big-picture economic trends or gain insights about groups of customers.

Banks do share aggregate data they collect

Piggy bank in front of orange background, illustrating our 7 money tips to help kick start your savings.
IMAGEThe data collected by the banks is combined to give their clients a better idea of customer spending trends.(Unsplash: Stoica Ionela)

Banks aren’t allowed to share your personalised data.

Aggregate data, however, is fair game.

Paul Wiebusch is a senior banking partner with one of the big four accounting firms. He says the banks have different approaches around whether they sell de-identified data, sell insights or don’t participate at all.

It’s a confusing landscape, so we asked Australia’s largest banks exactly what consumer information they share.

They all make clear they take the safety and security of customer information very seriously.

Commonwealth Bank

  • CBA gives its business clients (via an app called Daily IQ) anonymised data about their customers
  • The data comes from card transactions. It helps the business understand things like purchasing behaviour, average spend, average age and location
  • The bank provides insights (such as overall trends) at an aggregated level to banking clients.
  • Does not sell any customer data to a third party

Westpac

  • Has invested in a data-sharing platform called Data Republic. The bank shares anonymised data, which can be accessed by other partners on the platform
  • The bank also shares general insights and trends from data with its business customers

NAB

  • The bank has a commercial relationship with a data analytics company called Quantium. NAB gives Quantium access to its aggregate data, which Quantium uses to create insights it then sells to its clients. Quantium pays NAB for access to its aggregate data
  • Is also an investor in Data Republic, but to date has only conducted proof of concept testing using its platform

ANZ

  • Gives business customers anonymised data (collected from millions of ANZ card and merchant terminal transactions)
  • Uses Data Republic to better analyse its own data (but does not share data)
  • Does not sell any aggregate data

Should you be worried?

As it stands, the banks have exclusive access to all this information, and in some cases are making money from it.7 ways to protect your online privacyI’ve found there is a way to balance being active online, and protecting your privacy, Osman Farqui writes.Read more

But can the anonymous aggregated data be linked to our personal data?

The banks say they all have strong cyber security controls in place. Privacy expert David Batch works at one of the big four accounting firms, and says this is no guarantee of safety.

“While they do have a big dataset — they’re one of the most regulated industries and I think the future of privacy in the banking sector is looking better than ever,” he says.

Can I get any benefit from my own data?

Not yet.

In July, new legislation named Open Banking will be introduced, giving customers access to their own data.The government wants to free up your bank data. Here’s what that means for youCritics fear that without careful consideration, the ambitious digital project — which the government calls a “game changer” — could have serious privacy implications.Read more

The aim is for customers to use their data to get a better deal from another bank.

Customers will be able to either download a document with their information and share it with whomever they wish, or authorise another bank to get access from their current bank.

It will start in the banking sector and work its way around the energy and telco sectors, before being rolled out economy-wide.

It’s already been introduced to the EU, UK and Japan and will be launched here in July.

Find out where you stand

Mr Batch says we should take comfort from the fact the banking industry is one of the most highly regulated industries.Switching banks is less painful than you thinkRelationships with banks may last longer than many marriages, but tackling the switch can get you a better deal.Read more

But if you’re worried about your data, start by reading the privacy policies.

“That’s always been the tricky bit for a consumers,” he says.

“The way banks have traditionally informed [us] is through their privacy policies, but the research shows nobody really reads those policies.”

The Consumer Action Law Centre’s Katherine Temple says: “If you’re unhappy, don’t be shy in reaching out to your bank to make a complaint or to organisations like ours.”

Uncheck the box

Before you sign up for a new product from a bank, read the conditions carefully and be aware of your preferences.Like this article? Read more about wellbeing, food, work, travel, money, entertainment, sex and relationships and more at ABC Life.Read more

Professor Kingsford Smith says there’s often a default setting which has already checked the box which says, “I agree to you using my information for a variety of purposes”.

“Unless you uncheck the box or deliberately indicate you do not consent, then they will use your information, usually at an aggregate level,” she says.

“It can result in that information being sold to another place and you can get bombarded with cost-selling a variety of things and opportunities which you probably don’t want.”

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