Pub. 10 2015-2016 Issue 6

www.nebankers.org 14 Extraordinary Service for Extraordinary Members. COUNSELOR’S CORNER Banking in the Big Data Era: Brave New World? Kris Karnes & Bryan Handlos, Kutak Rock LLP T HAT “[T]HE ERA OF BIG DATA HAS arrived” 1 is not news to bankers. Banks are sophisticated users of big data and are well aware of the basic regulatory issues implicated by data usage. Nonetheless, a new cloud has appeared on the horizon. It may be time to begin to think and act differently as this cloud grows andmoves in banks’ direction. “Big data” is not a legally defined term. By one view, “big data” refers to large sets of data characterized by the “three Vs”: (1) high volume; (2) high velocity compilation and analysis; and (3) a wide variety of sources. 2 Big data does not necessarily involve personally identifiable information. Even so, the things that can be done with big data are, depending on your point of refer- ence, either amazing and exhilarating or worrisome, perhaps even ominous. The Cloud on the Horizon It does not take much imagination to predict that banking regulators and others will be giving more and closer attention to the impact of big data. The government has already begun to make its concerns known. In May 2014, the White House published a report titled, “Big Data: Seizing Opportunities and Preserving Values.” 3 In January of this year, the Federal Trade Commission (FTC) published a report on big data titled, “Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues.” The FTC Report was based in part on a workshop held in September 2015. 4 It is likely just a matter of time before banking regulators weigh inmore heav- ily. Regulatory impacts already exist in multiple areas. Some Existing Regulatory Im- pacts Relating to the Use of Big Data Regulatory concernsmay not remain this limited, but bankers should main- tain at least a baseline awareness of the following issues: The Gramm-Leach-Bliley Act (GLBA), Title V, Subtitle A 5 —Financial institutions subject to the GLBA and its implementing regulation 6 should ensure that their collection and use of big data is compliant with relevant pri- vacy requirements. Among other things, bankers should keep an eye on whether their privacy policies remain accurate. What types of data are collected? With whom is such information shared? The Fair Credit Reporting Act (FCRA) 7 —Banks that collect and use data must consider the applicability of the FCRA and whether their proposed uses are compliant. For example, if the bank is sharing data with an entity that should be considered a consumer re- porting agency, 8 is it complying with its obligations as a furnisher? If the bank is using third-party data brokers to assist with the collection, analysis, and use of big data, is the data broker a consumer reporting agency? What implications does that have for the bank’s activities? The FTC suggests not overlooking the fact that third-party firms may be con- sumer reporting agencies even if they evaluate a bank’s own transaction and