Alongside the commercial opportunities presented by personal data come risks, and alongside those taking advantage of the big data boom are those missing out. So who’s leading the field and who’s lagging behind in the race to mine our personal information?
Winners
- Technology giants such as Amazon, Google and Facebook, which have created enormous value by mastering the data refining process, and their investors. Investors in Amazon have enjoyed compound annual returns of 41% (over 20 years), Google 25% (over 15 years) and Facebook 32% (over six years).
- Parents who were alerted to a potentially damaging oversight following data analysis by insurer Legal & General, which found that many did not purchase life insurance following the birth of their first child, although they did after a second. This tendency could be conveyed to intermediaries, who could alert first-time parents to the risks associated with this common oversight.
- Investors who are using big data, including personal data, to inform their strategies. In the EY 2017 Global hedge fund and investor survey of 106 hedge funds and 55 institutional investors, it finds that 78% of hedge funds currently use, or expect to use in the next 6–12 months, ‘non-traditional’ data, such as social media data, credit card data and search trends.
- Facebook. Following the Cambridge Analytica data leakage scandal, a relatively high-profile #DeleteFacebook campaign was launched and there was extensive press coverage about consumer outrage. However, Facebook’s daily active users (DAUs) continued to increase during the first half of 2018. Research company AppOptix concluded: “It is clear that declines in short-term Facebook app use were non-existent. That is, consumers shrugged off the incident and have maintained their usage patterns.”
- Consumers of financial services and products, who benefit from having their personal data used to create and refine products. Financial advisers can offer their clients access to the moneyinfo personal financial management and client portal app, which links to and analyses data from credit cards, bank accounts, mortgages, investments, pensions and insurance policies. Clients see a complete, up-to-date picture of their finances; can access tools such as spending pattern trackers; and receive a more sophisticated service from their advisers.
Losers
- Those whose mental health is harmed by social media use. Smartphone companies and social media platforms have been accused of designing addictive products, and a December 2017 Facebook Newsroom article – ‘Hard questions: is spending time on social media bad for us?’ – states: “In general, when people spend a lot of time passively consuming information – reading, but not interacting with people – they report feeling worse afterward … A study from UC San Diego and Yale finds that people who click on about four times as many links as the average person, or who like twice as many posts, report worse mental health than average in a survey.”
- Those who fall foul of the General Data Protection Regulation governing how personal data should be gathered, managed and protected, with onerous consequences for not complying – including a fine of up to €21m or 4% of global turnover, whichever is the higher.
- Equifax, the consumer credit scoring agency, which fell victim to a hacking attack that compromised sensitive personal data of 143 million US consumers. It took more than a month for Equifax to publicly disclose the breach, and a week later, its share price had dropped 37%. The CEO, chief information officer and chief security officer stepped down. Equifax later confirmed it was party to more than 240 consumer class action lawsuits, as well as financial institution and shareholder class action lawsuits.
- UK telecommunications company TalkTalk, which had its systems breached in 2015, compromising the personal data of 157,000 customers. The hack resulted in £42m of exceptional expenses and the company lost 95,000 (or just under 2.5%) of its broadband customers. The Information Commissioner’s Office imposed a record fine of £400,000.
- The poor, who may be caught in a “death spiral of modelling”. For example, those on lower incomes are more likely to have bad credit and live in high-crime neighbourhoods. Because of this, algorithms used in recruitment score the poor as high-risk and block them from jobs, while other algorithms access this information and increase the cost of credit and insurance, making their financial position even more precarious and driving their credit score down further.
The full version of this article appears in the Q3 2018 print edition of The Review. All members, excluding student members, are eligible to receive the quarterly print edition of the magazine. Members can opt in to receive the print edition by logging in to MyCISI, clicking on My account, then clicking the Communications tab and selecting ‘Yes’.
Once you have read the print edition, keep coming back to the digital edition of The Review, which is updated regularly with news, features and comment about the Institute and the financial services sector.
Seen a blog, news story or discussion online that you think might interest CISI members? Email bethan.rees@wardour.co.uk.