How to make £16.5bn by protecting personal data
The business case for better personal data management also respects our right to a private life. We now have the right to be forgotten, or get paid to be remembered.
There is new group of companies that improve how information is shared between businesses and customers. Personal Information Management Services (PIMS) are returning purchase histories, information about social network profiles and health records to individuals.
This data is then shared with whichever companies that person decides to trust with it. Bill Monitor helps people retrieve detailed mobile phone use statistics, and lets them share their data with several suppliers in return for a personalised discount on their contract. Tictrac stores health information securely. People can then choose to share it with their employer in order to customise their healthcare benefits.
These companies provide personal data protection. But they also provide consumer-facing firms with reliable, up-to-date and detailed data about potential customers. Nesta co-funded research published today estimating the potential value of PIMS to other businesses at £16.5 billion. There is a huge, new financial opportunity in protecting privacy. And businesses in data-rich sectors are starting to take notice - Vodafone is one of the other funders of the paper.
How to get to £16.5 billion
The research team at Ctrl-shift got to this figure by imagining a parallel world where central services – banking, retail, telecoms etc – are mediated by PIMS.
Through interviews with 20 businesses and a survey of 30 PIMS, they modelled where personal data is exchanged, how often and by what fraction of the population. They used this to create a unit: an average 'relationship' between business and customer, where the business can access data and communicate directly with that individual. Looking at areas where PIMS already exist, they estimated that businesses will pay £4 per relationship per year.
They then calculated the maximum number of relationships per person and per household in the UK. The researchers only included those where the motivation for using PIMS is clear. For example, there are lots of potential relationships for sharing financial transaction data. For the individual, this helps them to monitor their spending more closely. For the company, it offers better protection against identity fraud and more accurate credit information. Ctrl-shift estimates the number of relationships that could be mediated by PIMS is, conservatively, 20 per household and 45 per person.
Scaling this to all households and all UK adults, and multiplying this total number of relationships it by £4, the potential value of PIMS is £11.5 billion.
An extra £5 billion comes from adding in PIMS that act like close advisers rather than monitoring tools. Some PIMS offer healthcare solutions or suggest new ways to manage household energy consumption. Businesses can access very specific customer profiles through these PIMS, paying higher commission for this, while the PIMS remains free to the customer.
PIMS' central economic role is to facilitate the upward flow of rich, detailed information about the location, nature, size and shape of demand, to allow for much more efficient alignment of supply to demand. But doing this at scale will depend on how they make themselves attractive to the buyer. At the moment, they are a niche new category of company that has reached few of the 27 million households in the UK used to make the £16.5 billion market estimate.
How could PIMS scale?
Nesta is interested in PIMS because people's relationship with data about themselves is evolving fast. As my colleague George Windsor said last week, we are all still working out how to balance data protection and data-driven innovation. PIMS are one way to make the abstract conversation about personal data more concrete.
They are most successful so far when they concentrate on one area of a consumer's life – eg Apple manages personal data held on an iPhone through Passbook (for travel documents) and their forthcoming Health app. For this analysis, Ctrl-shift categorised relationships under 'manage my travel', 'manage my wellbeing', as well as 'manage my social networks' and 'manage my home' etc. This is to reflect the way that people file information, not how businesses usually approach them.
Consumer goods scale-up and reach a mass market because they categorise themselves in line with the consumer’s categorisation of their own life. It is PIMS that organise themselves around a person's activities and not around a sector that are more accessible, and more likely to scale.
The report of the research done by Ctrl-shift is available here. Parts of Chapter 2 and Appendix I expand on what is written here. Appendix II includes details of many of the PIMS the researchers spoke to.