Today’s companies are nothing without their data.
But whereas ventures like Facebook found success turning personal information into targeted ads, others are entering the data business with greater caution.
A report published Monday by The Economist Intelligence Unit finds obstacles like vague regulation and consumer privacy make it harder to turn information into profit.
In a survey of 476 senior executives, almost 60 percent say they already generate revenue with their data. Additionally, 83 percent believe data make their products and services more profitable.
Companies say the biggest challenge to making money off data is their fear of letting competitors in on their business insights. But going forward, almost half of the companies plan to share more data with others in the industry, especially when transparency means everyone wins.
For founder Rosaline Chow Koo of ConneXionsAsia, their platform managing medical insurance is made better the more health information they gather. With all the data, CXA creates lists of best practices and compares health programs across industries and countries.
One of its tools makes personalized health recommendations by learning why people are visiting the doctor. And for companies, healthier workers make better workers. Providers and distributors can use the data to provide quotes and attract more clients—everyone benefits.
“If we modify those lifestyle habits, we can figure out what can actually reduce claims,” Koo said. “So can we use our data to make people healthier? Yes, and that’s what we have the data to do for us.”
“You can imagine the power of that data to show what works and what doesn’t work in terms of wellness programs that actually move the needle, to lower claims costs, reduce absenteeism and increase productivity,” Koo noted in the report.
The second highest concern for data businesses is fear of cyber attacks, with more than a third of surveyed companies referencing significant data breaches in the last year.
Companies are also prioritizing protecting consumer privacy. Most (86 percent) believe customers trust them with their information, but only 34 percent feel like they are “very effective” in being transparent to people about how their data is used.
In another finding, 36 percent say they will invest in more technologies like cloud storage and security enhancements. Research firm IDC predicts this area of the market will grow to around a $50 billion industry through 2019.
According to the report, regulatory restrictions ranked as the third obstacle to monetizing data. Regulations around big data are still very new in Asian markets, while rules are more established in North American and European markets. As such, laws around data collection are mostly outdated and being rewritten as the industry changes.
Keeping up with those changes has been further bogged down by inconsistent regulations across different jurisdictions, particularly in cases where international businesses own data that transcend borders. That’s where regulation like the Safe Harbor agreement would ideally come in.
The agreement between the US and the European Commission required companies to protect the privacy of EU citizens regardless of where their information is processed. By October 2015, the European Court of Justice found the law invalid, leaving thousands of companies without a structure to transfer data between the EU and U.S.
Meanwhile, Hong Kong has in place the Personal Data (Privacy) Ordinance, which requires obtaining a person’s consent if their data is used in a new way. The policy has been in place since 1995, but it too recognizes that the industry is ahead of the law.
“In the Internet era, modern commerce and consumer activity increasingly relies on the seamless flow of personal information across jurisdictions with different privacy laws and enforcement arrangements,” commissioner of the ordinance Allan Chiang said in a statement on privacy.
“Privacy has become an international issue and requires an international response."
In the year ahead, the EIU report forecasts more data trading as mining becomes even easier with more connected devices on the ground. More importantly, businesses, consumers and lawmakers must find a way to coexist and make money as they shape the future of big data.
Title image by Didier Weemaels