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How GDPR data laws will affect SA business

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Previously, protecting data was the responsibility of the employer, but now the payroll software provider shares this responsibility. WARREN VAN WYK, co-founder and director, Payspace discusses General Data Protection Regulation (GDPR) on payroll.

The most significant update in data protection legislation will come into effect in May this year. The General Data Protection Regulation (GDPR) has a very specific mandate: to provide greater personal data protection. The legislation applies to all individuals within the European Union (EU), and covers all information that could identify them, both directly or indirectly. 

As a South African based business, you may think GDPR doesn’t apply to you. But this is not necessarily the case. GDPR may be EU legislation, but it affects any company that has business interests in the EU, or that employs EU citizens. Given the multinational scope of business in today’s globalised market, companies don’t stay domestic-only for long. If your company is already international, or is in pursuit of growth, then it’s crucial that you comply with GDPR sooner rather than later. There are severe penalties for non-compliance that simply aren’t worth the risk. 

How will this affect HR and payroll teams?

Payroll and HR departments process huge volumes of personal information. There is no doubt that GDPR will disrupt how things are currently done. HR and Payroll managers will have to take on new responsibilities to make sure that their processes comply with the legislation. 

Additional responsibilities will include having to issue privacy notices to employees and job applicants that clearly outline how their personal information will be used and if it will be used outside the EU. Any transfer of data out of the EU can only be done with regulatory approval. If there is any security breach, payroll managers have 72 hours in which to alert the data protection authorities. 

Fortunately, these new pressures can be shared. If your company outsources its HR and payroll processes for example, then the in-house team and the provider share the responsibility of ensuring GDPR compliance. Your data controller will oversee adherence to GDPR’s core principles, and the payroll provider will support this with technical and organisational measures, such as data encryption and secure storage. 

  

Enhanced security

GDPR is making businesses around the world reassess their data security measures and pay more attention to their current processes. This enhanced security consciousness is setting a new global standard. This means that, even if your business isn’t legally obliged to comply with GDPR, you should still make sure your company’s data protection is up to scratch. This will help you remain competitive and avoid any potential reputational damage. 

To properly assess your company’s current data security measures, and prepare for GDPR, you need to review your entire payroll process. Take it apart step-by-step and determine how the system does or does not meet the legislative requirements – and what can be done to improve it. Of utmost importance is knowing who of your employees is in direct contact with sensitive information, and how do they collect, store, archive and destroy data.

A critical question to ask is: could you reduce the number of employees that have access to sensitive information? This will mitigate risk significantly. Industry best practice also calls for companies to only gather and use the data they need to perform their business. Give your dusty data archives a clear-out and put in place processes that focus on using and storing relevant information. 

When it comes to GDPR, the best approach for South African businesses (whether they are directly affected by it or not), is to view it as a global call for enhanced data security. Getting your business GDPR compliant sooner rather than later will only serve you in the long run. Adjusting to a change in legislation can be challenging. So, make sure your payroll software is secure and that the provider you work with is GDPR compliant and you’ll be halfway compliant in no time. 

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VoD cuts the cord in SA

Some 20% of South Africans who sign up for a subscription video on demand (SVOD) service such as Netflix or Showmax do so with the intention of cancelling their pay television subscription.

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That’s according to GfK’s international ViewScape survey*, which this year covers Africa (South Africa, Kenya and Nigeria) for the first time.

The study—which surveyed 1,250 people representative of urban South African adults with Internet access—shows that 90% of the country’s online adults today use at least one online video service and that just over half are paying to view digital online content. The average user spends around 7 hours and two minutes a day consuming video content, with broadcast television accounting for just 42% of the time South Africans spend in front of a screen.

Consumers in South Africa spend nearly as much of their daily viewing time – 39% of the total – watching free digital video sources such as YouTube and Facebook as they do on linear television. People aged 18 to 24 years spend more than eight hours a day watching video content as they tend to spend more time with free digital video than people above their age.

Says Benjamin Ballensiefen, managing director for Sub Sahara Africa at GfK: “The media industry is experiencing a revolution as digital platforms transform viewers’ video consumption behaviour. The GfK ViewScape study is one of the first to not only examine broadcast television consumption in Kenya, Nigeria and South Africa, but also to quantify how linear and online forms of content distribution fit together in the dynamic world of video consumption.”

The study finds that just over a third of South African adults are using streaming video on demand (SVOD) services, with only 16% of SVOD users subscribing to multiple services. Around 23% use per-pay-view platforms such as DSTV Box Office, while about 10% download pirated content from the Internet. Around 82% still sometimes watch content on disc-based media.

“Linear and non-linear television both play significant roles in South Africa’s video landscape, though disruption from digital players poses a growing threat to the incumbents,” says Molemo Moahloli, general manager for media research & regional business development at GfK Sub Sahara Africa. “Among most demographics, usage of paid online content is incremental to consumption of linear television, but there are signs that younger consumers are beginning to substitute SVOD for pay-television subscriptions.”

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New data rules raise business trust challenges

When the General Data Protection Regulation comes into effect on May 25th, financial services firms will face a new potential threat to their on-going challenges with building strong customer relationships, writes DARREL ORSMOND, Financial Services Industry Head at SAP Africa.

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The regulation – dubbed GDPR for short – is aimed at giving European citizens control back over their personal data. Any firm that creates, stores, manages or transfers personal information of an EU citizen can be held liable under the new regulation. Non-compliance is not an option: the fines are steep, with a maximum penalty of €20-million – or nearly R300-million – for transgressors.

GDPR marks a step toward improved individual rights over large corporates and states that prevents the latter from using and abusing personal information at their discretion. Considering the prevailing trust deficit – one global EY survey found that 60% of global consumers worry about hacking of bank accounts or bank cards, and 58% worry about the amount of personal and private data organisations have about them – the new regulation comes at an opportune time. But it is almost certain to cause disruption to normal business practices when implemented, and therein lies both a threat and an opportunity.

The fundamentals of trust

GDPR is set to tamper with two fundamental factors that can have a detrimental effect on the implicit trust between financial services providers and their customers: firstly, customers will suddenly be challenged to validate that what they thought companies were already doing – storing and managing their personal data in a manner that is respectful of their privacy – is actually happening. Secondly, the outbreak of stories relating to companies mistreating customer data or exposing customers due to security breaches will increase the chances that customers now seek tangible reassurance from their providers that their data is stored correctly.

The recent news of Facebook’s indiscriminate sharing of 50 million of its members’ personal data to an outside firm has not only led to public outcry but could cost the company $2-trillion in fines should the Federal Trade Commission choose to pursue the matter to its fullest extent. The matter of trust also extends beyond personal data: in EY’s 2016 Global Consumer Banking Survey, less than a third of respondents had complete trust that their banks were being transparent about fees and charges.

This is forcing companies to reconsider their role in building and maintaining trust with its customers. In any customer relationship, much is done based on implicit trust. A personal banking customer will enjoy a measure of familiarity that often provides them with some latitude – for example when applying for access to a new service or an overdraft facility – that can save them a lot of time and energy. Under GDPR and South Africa’s POPI act, this process is drastically complicated: banks may now be obliged to obtain permission to share customer data between different business units (for example because they are part of different legal entities and have not expressly received permission). A customer may now allow banks to use their personal data in risk scoring models, but prevent them from determining whether they qualify for private banking services.

What used to happen naturally within standard banking processes may be suddenly constrained by regulation, directly affecting the bank’s relationship with its customers, as well as its ability to upsell to existing customers.

The risk of compliance

Are we moving to an overly bureaucratic world where even the simplest action is subject to a string of onerous processes? Compliance officers are already embedded within every function in a typical financial services institution, as well as at management level. Often the reporting of risk processes sits outside formal line functions and end up going straight to the board. This can have a stifling effect on innovation, with potentially negative consequences for customer service.

A typical banking environment is already creaking under the weight of close to 100 acts, which makes it difficult to take the calculated risks needed to develop and launch innovative new banking products. Entire new industries could now emerge, focusing purely on the matter of compliance and associated litigation. GDPR already requires the services of Data Protection Officers, but the growing complexity of regulatory compliance could add a swathe of new job functions and disciplines. None of this points to the type of innovation that the modern titans of business are renowned for.

A three-step plan of action

So how must banks and other financial services firms respond? I would argue there are three main elements to successfully navigating the immediate impact of the new regulations:

Firstly, ensuring that the technologies you use to secure, manage and store personal data is sufficiently robust. Modern financial services providers have a wealth of customer data at their disposal, including unstructured data from non-traditional sources such as social media. The tools they use to process and safeguard this data needs to be able to withstand the threats posed by potential data breaches and malicious attacks.

Secondly, rethinking the core organisational processes governing their interactions with customers. This includes the internal measures for setting terms and conditions, how customers are informed of their intention to use their data, and how risk is assessed. A customer applying for medical insurance will disclose deeply personal information about themselves to the insurance provider: it is imperative the insurer provides reassurance that the customer’s data will be treated respectfully and with discretion and with their express permission.

Thirdly, financial services firms need to define a core set of principles for how they treat customers and what constitutes fair treatment. This should be an extension of a broader organisational focus on treating customers fairly, and can go some way to repairing the trust deficit between the financial services industry and the customers they serve.

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