It’s my data and I’ll deal if I want to
The landscape of data ownership is starting to shift. Regulations are making it more complex for organisations to gather and hoard; customers are learning their data has a value and are beginning to bargain. Capita’s innovation director, Alan Linter, wonders where it could lead.
Earlier this year, the Open Banking Standard came into force with the first APIs launched in January. This represented a significant step for personal data in the UK because it’s now a legal requirement for banks to share your financial data with the organisations you instruct them to.
And that will include your transactional information – what you spend and where you spend it.
For many people that makes up a lot of the footprint of who you are, how much you earn, and what you like to use your money for. So that’s a huge change in terms of granting organisations access to important data that they currently don’t have on you – data that enables them to significantly improve what they can offer, including a number of the services traditionally carried out by banks.
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So, a leading telecommunications company, for example, might say, ‘while we’ve got all this data, maybe we should become an insurance company or a lending company?’.
Equally the banks could be thinking, ‘if we’ve got to share this data and see some of our business disappear, maybe we should make up for it by including a mobile phone offering?’.
I think it’s also a demonstration of the growing trend to return the power of personal data back to the customer.
Trust and customer service
Clearly the major issue right now is one of trust. It’s likely that, for a while at least, customers will continue to prefer to trust banks with their savings, rather than a mobile phone operator, but who’s to say that situation won’t change over the years?
And it’s not hard to see how that can happen in small steps. Last year it became clear that Amazon was targeting the insurance business in the UK and a few other European markets and was starting to recruit insurance professionals with the aim of offering its own service.
Amazon already has a fantastic reputation for customer service – not something the insurance industry always enjoys – so probably reckons it can disrupt that market fairly successfully. It knows many of the products its customers have in their homes, and through the Echo and Alexa it’s building a strong base in smart home technology. All those items will need insuring.
As customers begin to proactively share more of their data with organisations who’ve earned their trust – both via good customer service and the respect with which they’ve treated that information – you could see companies like Amazon also offering, say, energy. You continue to get your electricity from npower, but you do it via Amazon.
You pay Amazon, they get a good deal for you and pay npower and, if anything goes wrong, Amazon sorts it out for you.
If you want my data, pay up
I think another major change we’ll see around personal data is a shift from customers feeling they have to share it, in order to get any kind of service from an organisation, to saying, ‘no, if you want it, you pay for it’. We’ll enter the age where we can monetise our own data.
What’s interesting about the Open Banking Standard is how it encourages that sense of ownership: this is your data for you to share as you wish, with whom you wish. It’s not something the banks can keep to themselves.
There is a vast number of companies that make their money on the back of personal data, for example, price comparison websites where energy companies pay them for generating leads. So, what happens when customers say, ‘ok, you can share my information with these half a dozen energy firms if you want, but you’ll need to pay for the privilege if you want to profit from it. And if you don’t, well, you’re not going to have it, and you can’t do your business’.
Similarly, I remember we once calculated that on average you need to contact 26 organisations when you move to a new house in order to give them your new details. What if, instead, you granted those organisations access to your information, so their databases would update automatically, but, as they’re saving money on staffing contact centres to take your call, you want half of that saving back.
Will customers catch on to the value of their data? Is the general public at the point of realising it could make money from its personal data? No, probably not, because we are so used to giving it away for free.
But some sections of the public will be at that point, and I think we’ll see a flurry of new, niche services that will expose people to the cost advantages of bargaining with their data more robustly. And news will get around.
As GDPR takes hold, and customers become more aware of the power of their personal data, I think you could see two trends developing in the future.
There will be 1) those who will automatically tick ‘no’ to everything and refuse to share their data with organisations because they see no advantage to it and they prefer the idea of keeping that data to themselves. And 2), those who will say ‘sure, you can have it, but you’ll have to pay, either through a cashback deal, or by offering me a better or lower cost service, or some other way for me to make money’. What will disappear is that group that just ticks ‘yes’ without any thought or expectation of return.
Gradually, customers will become educated about how much their personal data is worth. If they could see the billions of dollars huge companies like Google and Facebook make on the back of their data – and nothing else – I think many would, frankly, be horrified.
So could we reach a point where consumers say to them: ‘for every pound you make on my data I want 10p, or I’m taking it all away from you’. Absolutely. Why not?
The Open Banking Standard
The standard sets out to establish a way in which data can be securely shared or published through open APIs, enabling third party apps to access users’ information through their bank accounts. (Most notably Fintech companies looking to offer more competitive services than traditional banks can.) By allowing banks and third-party developers to work together, customers should find they can:
- more easily compare current account services before deciding on a switch
- see clearer snapshots of their financial history so they can budget better
- access credit from third-party lenders that may have more advantageous loan rates
- easily run affordability checks to speed up loan processes (an improvement on the tedious uploading of bank statements)
- connect accounting software directly to bank accounts to make online accounting simpler for businesses
- make better use of specialised third party fraud detection.
The Open Banking Working Group began formulating the standard in 2015, at the request of HM Treasury, as a way of exploring how personal data can be more easily used to help people transact, save, borrow, lend and invest their money. January was just the start of its roll out, and the Competition and Markets Authority will be enforcing its implementation.
Rather than being restricted to doing all your banking through one organisation, Open Banking envisages customers mobilising their personal data in a way that lets them have a current account with one provider, insurance with another, a mortgage with a third… all far more conveniently than they presently can.