Introduction

In markets such as financial services, energy and communications, consumers often find it difficult to identify the best-suited service providers, switch to new services, or receive support and advice on the options available to them. These markets have been the focus of a recent UK Government review aimed to improve consumer outcomes by enabling businesses to securely share consumer data with third-party providers.

In 2018, the Department for Business, Energy and Industrial Strategy (BEIS) published its Modernising consumer markets: green paper announcing the launch of a Smart Data Review. The resulting review sets the vision to foster Smart Data initiative developments and is building on the success of Open Banking, originally set up by the Competition and Markets Authority on behalf of the UK Government and now gathering pace in various markets around the world. Open Banking empowers fintech innovators to develop new, more frictionless solutions for individual and business customers. This is achieved by enabling the primary data holder, such as a retail bank, to share the relevant financial data with third-party providers (TPPs) in a safe and secure way.

The vision for Smart Data in other markets is very similar, but the wider scope necessitates a more comprehensive analysis of potential risks and benefits, as well as technical and regulatory models for implementation.

As part of the Consultation process (closed as of 6 August 2019), The Alan Turing Institute’s Finance and Economics Programme released a publicly available response that highlights key considerations in Smart Data initiatives.

Below we describe the top three themes, highlighted by our contributing researchers.

Top three themes

1. What happens once the data is shared?

Regardless of the market in question, all Smart Data initiatives need to consider how people’s data will be treated on an ongoing basis, not just at a fixed point in time.

The review highlights the importance of sharing data securely, with consent from data subjects (individual users)— which is an important first consideration. However, it can be difficult to track the movement and the metamorphosis of data over time, for example when it is anonymised or used to train machine learning models.

Consumer-generated data often informs business decision-making and impacts data subjects in indirect ways. It is therefore not enough to consider the technical and regulatory ways that would enable secure and ethical sharing of data. It is also important to think of new ways to encourage organisations to engender trust in their business models and offer more transparency about the provenance of the data they hold.

While the General Data Protection Regulation (GDPR) is an important first step in giving data subjects control over personal data, we would welcome further clarity on the legal and economic rights of data subjects — especially in situations where data moves beyond GDPR jurisdictions or gets separated from the user’s identity.

"All Smart Data initiatives need to consider how people’s data will be treated on an ongoing basis, not just at a fixed point in time."

2. Will Smart Data initiatives affect some consumers more than others?

We welcome the Government’s motivation to put in place specific measures to protect consumers in vulnerable circumstances, and we encourage further clarity on what constitutes a “vulnerable consumer.” For example, financial vulnerability is related to low financial resilience, and can include experiences such as low financial capability, a divorce, a bereavement, physical or mental health conditions that affect one’s daily activities in a significant manner.

The different types of vulnerability may warrant different measures; otherwise whole societal groups will be at increased risk of exploitation, or their vulnerabilities will be exacerbated in indirect ways. Our response proposes a few high-level examples of potential interventions, such as introducing proxy services that can act on behalf of those with low technical or financial literacy.

More importantly, we believe an in-depth analysis will be required for each market—and potentially across markets segments—to provide guidance for businesses and improve consumer outcomes. The ongoing work by the Financial Conduct Authority (FCA) on the fair treatment of vulnerable consumers can serve as an important foundation for determining a more consistent and measurable approach to tackling vulnerability.

3. What sectors would benefit from Smart Data initiatives?

Being part of the national institute for data science and AI, we believe that the safe and secure sharing of data – if done right – will be the essential pre-requisite for innovation across all industry sectors.

It is also true that Smart Data initiatives can involve considerable reputational and societal risk. It is important to start in the areas that are least likely to cause public backlash and inhibit further market development.

We encourage the Government to lead the charge in establishing best practice by becoming a Smart Data facilitator for citizen data. The Government can set good examples of being transparent about the reasons certain types of data can or cannot be made available, such as tax, education, healthcare, or Border Force records.

Our response also cites a few high-potential, lower-risk examples of data sharing in public services and academic research, for example the use of people’s mobility data to inform transportation initiatives or to improve the electric vehicle infrastructure.

Conclusion

We are excited about the vision to enable a safer and more secure flow of data across organisational borders. While there can be inherent tensions between the goals of consumer control over data and enabling innovation, we remain optimistic that the right balance can be struck between regulation and ethical innovation. Building on the achievements of Open Banking in the UK, Smart Data initiatives can be successful in many industry sectors if we don’t lose the sharp focus on consumer trust and nurturing innovation.