Sharing of financial information allows companies to provide discounts to
consumers for services that may be offered by third parties and affiliates.
Discounts may be offered for buying a bundle of services or for buying
several different types of insurance from different companies through
the same sales channel. When this happens, consumers benefit from the
reduced cost of executing the transaction.
Shared financial information allows companies to make proactive offers to
consumers. If a financial services company is aware of a change in a customer's
financial status or needs, the company may proactively reach out to the
consumer with a product that is appropriate for him or her. Consumers who
may be unaware of all their financial options may particularly benefit from
this. At the same time, consumers who are particularly sensitized to
information-sharing may be offended by approaches of this kind. There is a
heavy burden on financial services companies to be cautious in this area.
In a study performed for the Financial Services Roundtable (FSR), Ernst & Young
found that customers of FSR member companies may save as much as one hour per year and
$75-100 dollars because of proactive financial offers. In the aggregate, this
represents about $7 billion dollars and 50 million hours per year — just among
customers of FSR member companies.
Consumers should be offered the opportunity to decline information sharing that
would bring them discounts and special offers. Given the legal obligation that
holders of information have to protect the privacy of consumers' information,
however, it is unlikely that many consumers would.
Benefits from Current Information Sharing by Financial Services Companies by
Ernst & Young (December 2000)