The personal data gold rush is over – the future lies in trusted, customer-centred data business models which will drive unforeseen increases in business efficiency.
IN BRIEF: Personal data is the new gold. It’s the 4th production factor after human resources, capital & commodities. But allowing it to be concentrated in just a few hands stifles innovation and competition. And worst of all, consumers – the owners of personal data – are being deprived of its value. We need to break out of this vicious cycle of mistrust, lack of transparency and control. The world’s oldest global network is founded on guaranteeing the security and privacy of individual communications – which is why today’s communication logistics industry is ideally placed to put personal data back where it belongs – with its owners. In turn, this will usher in unforeseen increases in business efficiency.
In the past
decade postal & logistics providers have responded to the emerging information-based
economy by becoming a data-driven communication logistics industry.
data becomes a dominating factor in production – and probably the most valuable
economic asset of all – access to personal information becomes a central issue.
Yet customers are increasingly aware that their personal data is being expropriated and they are currently being deprived of its economic value.
developments such as Facebook buying WhatsApp have turned public focus on the
lack of transparency, accountability and trust in markets that trade in
price tag involved in this particular deal also indicates the potential value
of personal data to business.
and economic power that personal data represents is concentrated around the institutions that operate the most centralised data-driven
infrastructures and network industries.
We could call them digital oligarchs, where the few benefit from the many, and objecting voices are easily muffled. Their aim is to maintain the status quo, rather than to democratise it for the benefit of the majority. This impedes both the rise of new services and stifles innovation.
human factor in production is increasingly replaced by personal information,
consumers are becoming more aware that their personal information has a
to monetize this personal data must be returned to those who own it.
The more consumers realise how the new information economy works, the more irritated they become. Trust is destroyed and a sense of fairness is lost as consumers see their assets being taken from them with no chance of regress.
situation is universally unsatisfactory:
The current shadow market in global personal data has the potential to undermine any long-term viability, leaving the whole industry to operate on the edge of what is morally sustainable.
information is the currency driving the digital world.
market for personal information based on fundamental privacy legislation can
ensure consumers receive proper compensation for its value. This means bringing
it out of the shadow market, where personal information is traded without
accountability to customers.
There is no
doubt that an adequate balance between the right to privacy & data
protection on the one hand, and economic efficiency on the other, must be
found, and quickly.
Leading scholars, such as Professor Dr. S. Spiekermann&A. Novotny at the Vienna University of Economics, and thinkers including Jaron Lanier (Who owns the future?), Erik Brynjolfsson & Andrew McAfee (Race Against the Machine) are offering workable adjustments to the current macro and microeconomic business model, to make it fit for the challenges of the digital economy.
Professor Dr S. Spiekermann & A. Novotny propose a 4 space market model:
customer relationship-centric model, customers are willing to provide their
personal information in payment for services knowing they will receive an
appropriate return. This is the absolute opposite of today’s model, where
customer relationship holders often serve as a gateway to the shadow markets.
proposed model requires that only the single relationship holder visible to the
customer collects the personal data. This relationship holder then becomes liable for the proper handling of the
data in any exchange.
accordance with the relevant data protection legislation, personal information
received by the relationship holder is recognized as being owned by the
customer. The relationship holder is only permitted to use the data for the purposes
as set out in the digital personal data use policies.
This requires identified one-to-one transactions. This comes very close to solutions
currently being proposed by leading postal service providers (e.g. credential
exchange services such as Postal eID). Dealing with only one
relationship holder at a time will re-establish predictability and trust in
prerequisite is contextual integrity – where people always have the right to a
personal data privacy-friendly service – if the use of personal information is to be legitimate.
Any data exchange
between customers and relationship holders, and any further use of this data,
is therefore strictly limited to the purpose of the transaction. Personal information cannot be used for purposes unrelated to the transaction, and the
relationship holder is held liable.
complex service environment, in which strategic alliances across multiple organizations are the rule, reduces the security of personal information.
are increasingly concerned about the secondary uses of their data by such
invisible organizations. In this so called “customer relationship holder-
controlled data space” the customer relationship holder should be liable and
accountable to their subcontractors.
customers back what belongs to them in the first place requires new policies,
standards and governance to enable the necessary accountability.
of the most promising consequences of this would be to reduce barriers to market
Today data is controlled by those who dominate the market. In a customer-controlled data space, companies do not obtain a critical mass of users; instead, users proactively address companies and aggregate reference data that can be obtained from a big data space.
look at the economy as a whole we see
that although vast amounts of data are available, markets are not yet able to leverage
on it effectively. Quite the opposite in fact; many
markets are stagnating, or even in recession.
Contrast this with rapid developments in the traditional post, parcel and logistics industries, which are merging and coalescing to form the digital, multichannel, communication logistics industry.
This industry is founded on a global infrastructure, standards and applications, and based on fundamental principles:
These principles also form the building blocks for any future, sustainable business model in which personal data is a key driver.
therefore no surprise that global organisations driven by actual market
needs – such as the Universal Postal Union (UPU) – are currently establishing
the foundations for the next generation postal network.
They are developing standards, regulations and business models to meet these global challenges.
Fig.1: The Universal Postal Union: A proposed identity management environment
element is the proposed Postal Identity management standard.
framework describes identity management elements and identifies common
protocols used to exchange identity assertions and attributes for the purpose
of enabling customer access to applications within the postal network.
identity elements are defined to ensure the interoperability of credentials
issued by postal operators worldwide, or by others for use in the postal
standard will provide a basic understanding of identity management roles,
technologies, activities and principles for the next generation postal network.
We believe that, having evolving from postal services and acting as trusted mediators in a regulated and globally governed network industry, the communication logistics industry is well positioned to support this balanced approach. Giving customers back the rights to the personal data that belongs to them in the first place will accelerate the rise of new services and speed up innovation.
Walter Trezek is the Chairman of the Consultative Committee (CC) of the Universal Postal Union (UPU).
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