Although GDPR is an EU directive, it will impact all international firms, and ultimately provide an impetus to a healthy and much needed evolution, writes Steve Young, managing partner at Citisoft.
The upcoming General Data Protection Regulation (GDPR) will have a major impact on investment managers and the ecosystems that support them wherever the firms are located. As with all regulation that impacts the industry there are two distinct approaches to becoming compliant. First, and sadly the most common approach, is to take the regulation and ensure that each aspect is addressed in the simplest and quickest manner. The second approach looks at the overarching principals of the regulation, finds the client and business benefits, and then amends processes to support this change. Perhaps with GDPR the variance in these approaches will be most apparent.
Regardless of the approach, here are four key ways that GDPR will change business practices from May onwards:
- Improved User Experiences
Client engagement models will need to change to reflect that the client now has complete control over what they receive and the manner in which it is received. As a result firms will need to change their engagement models to provide clear and obvious benefit to the end client. Unless clients perceive that the engagement provides them with an easily understood and well-defined return they will be reluctant to consent to their personal data being retained and used.
This change in approach comes at a time when most insightful organisations are considering their entire user experience (UX), with a view to making this a key competitive weapon. In this way GDPR is entirely aligned with many business strategies and should be viewed in this way. Every communication and client engagements will need to be assessed prior to use to ensure it delivers a clear and well-understood client benefit, articulated in a way that is relevant and pertinent to the consumer.
- An end to cold calling and email campaigns and a return to thoughtful marketing
Over the last decade some of the models for sales and marketing have become industrialised and ubiquitous. Most firms use the same tools and processes to send out a large majority of their information via email. Whilst almost everyone measures and monitors how these are received, there is a simplistic and naïve approach to measuring their effectiveness. It is also impossible to differentiate between firms as a vast majority follow the same models for engagement, all based around building comprehensive marketing databases and exploiting this investment to the maximum.
Under GDPR this will need to change. Firms will need to be more creative and thoughtful in their approach. In order to succeed tenacity will need to be switched for insightfulness. Ultimately clients and prospects will need to feel a sense of reward when engaging and business models will need to be more interactive and personal to succeed. The industrial nature of most marketing approaches will quickly become outdated.
Again GDPR is well timed. The effectiveness of email led engagement models is increasingly under review. This is due to a number of factors; for example, recent changes in email client technology allows and encourages users to sort their mail box into Focused and Other inboxes, increasing the challenge of getting the target recipient to view the communication in a timely manner, if at all.
All communications, including Sales and Marketing will need to be enjoyed and respected by all, which will be to the benefit of both clients and suppliers.
- The rise of social media
Social media is a channel that is currently poorly utilised by the industry. However, as most social sites are based upon a follower model, it is already orchestrated to a post GDPR world. Most social media sites require the publisher to be consistently appealing to maintain and grow their profile. Social media will be an area that will continue to evolve and develop; this will also force firms to establish greater creativity and compelling communications tools. GDPR itself will be a stimulant in the changes to social media. It will be interesting to see how tools such as LinkedIn adapt: they will either be huge beneficiaries or will suffer in the post GDPR world.
This change will also bring communications more in line with the millennial and following generations. This is another area firms need to be considering regardless of the EU’s regulation.
- The rise of communities
Changes to communications models as a result of GDPR and other market forces will also change the way the clients and prospects consume information. Currently it is relatively simple to stay attuned to peer groups, suppliers, industry bodies etc. as updates are regularly received in the inbox. As the industry moves away from an email based model for all major communications, it will also change how these touch and validation points operate.
It is likely that the use of community tools and groups will start to emerge to share experiences and feedback. Firms will need to be welcomed and permitted to contribute to these communities and this will only happen if their behaviour and input is valued.
Again, this is a model that is prevalent in the emerging client generations, from Millennials onwards. GDPR will encourage an assessment of these models, and in a shorter timeframe than would otherwise have been the case.
GDPR will have to be embraced by all firms. Those who will gain the most from this step change will be the ones that change their whole business to embrace the ethos of the regulation. Engagement models need to change regardless of this regulation. Firms who acknowledge this and act will create significant advantages. Those firms that do not and, for example, have a separate approach for EU nationals and the rest of the world, will be missing the point and ultimately left behind as the industry moves forward.