UK: Data trusts and the data economy
Data trusts are a relatively new idea in the data world. They combine governance and stewardship to increase trust when sharing personal data. Jamal Ahmed, Director at Kazient Privacy Experts, provides an overview of what a data trust is and how companies may benefit from their use.
Typically, trusts are a way of managing assets such as investments, land, and money by holding these assets and making decisions on them. Data trusts work in the same way, but instead of a tangible asset, data is used. Trusts are a legal concept which provide independent regulation on the way data is used and stored. In this current climate of leaks and data breaches, could independent data trusts be the answer to better outcomes for clients and businesses?
Research has stated that in the UK, 44% of consumers would hesitate to do business with a company for a few months if they had suffered a data breach, and 41% of customers would never return to the business1. If companies are serious about keeping clients' data and business, then a data trust, where the data is used responsibly and safely held, could be mutually beneficial. This is because data trusts encourage individuals to become trustees of these trusts to make decisions about, and have a say in, what happens to their data.
The Centre for Data Ethics and Innovation, and the Competition and Markets Authority, are completing further research on how data trusts can be used in a commercial setting to help both consumers and businesses make informative choices on data protection. Information is collected by organisations on current and potential customers to increase revenue by knowing what consumers actually want from a business. This goes beyond simply keeping data for the purpose of a single transaction. On the one hand, it may make many customers feel uneasy that they do not know how or why their data is being used, or, knowing their data is being used for purely monetary gains which they may not have a say in. On the other hand, data trusts can let customers decide what they feel is appropriate for their personal information, with customers helping to regulate trusts from within.
The value of data to the UK economy is increasing in this technological era. In simple terms, data equals money. The more data you can extract from someone, the more targeted and personal you can make adverts and sales pitches, and companies may often sell this data to third parties to increase their revenue. From a company's point of view, gaining data means business growth and increased value. However, from a consumer point of view, although targeted adverts and deals may prove useful, the selling and profiting off of personal information is a thought which unsettles many. Data trusts can therefore make these processes more transparent and enable businesses and customers to work together.
Along with data trusts, another new technological innovation in recent years has been artificial intelligence ('AI'). AI is used to examine data and quickly create patterns and filter it into data sets. With the growth of data trusts, AI developers could use this new information for a common interest or shared belief, and to help people make informed choices. Using data trusts, where relevant data is all in one place, could streamline processes for AI innovators when developing solutions for the world's problems. In 2018, the Secretary of State for Health and Social Care spoke of the importance of using AI, and compiling AI with National Health Service data could save lives. The benefits of AI developers working with data trusts may be the good publicity that the data world needs, showing consumers the wider gains that can be made from sharing data.
In reality however, how practical will businesses find using data trusts? Would they be willing to give up their data to a trust when they know how valuable data is and how important it is to the economy? Large companies, which have the financial proficiency, business knowledge, and a vast consumer spread, would be able to offset any immediate pitfalls of using a data trust. The repercussions of not using one may not show immediately, but it could cost businesses more in lost consumers than it would in time or resources to initially set up with a data trust. For large businesses, using a data trust is completely practical, and smaller companies need to weigh up short term efforts to work with data trusts for long-term gains, which may enable a bigger customer base and an increase in returning consumers.
Jamal Ahmed FIP Director
Kazient Privacy Experts, London