Spoiler alert: Yes, they can.
The media often makes it sound like a choice has to be made between monetizing business data and maintaining privacy. But it’s not an either/or situation, it’s possible to do both at the same time.
Since the EU rolled out sweeping data protection directives through the General Data Protection Regulation (GDPR) in 2018, firms have been questioning how to leverage their data while being compliant.
Indeed, the Business Application Research Center (BARC) found the issue of data security is one of the major stumbling blocks for organizations in monetizing their data. If they fail to find a way past these barriers, they are not only missing out on a valuable opportunity, but they could also end up eating the dust of more agile competitors.
In its report, BARC stated that, “for many the risk of using data for internal and external monetization seems to outweigh the potential benefits.”
Maybe it is because businesses have been so unnerved by negative headlines regarding data privacy scandals that they fail to truly grasp what is possible under these regulations.
Let’s focus on external monetization, which is basically about leveraging your internal operational data to create a new revenue stream. But today, the mere mention of “selling data” creates a fear of reputational risk.
Ensuring data privacy should rightly be a chief concern for every company that is dealing with highly sensitive customer data. It’s not important just from a compliance perspective, but essential for building customer trust and loyalty.
However, there are ways of monetizing non-personal data and this is often an opportunity that is overlooked. Companies may ask, “How can my data be valuable if it’s missing certain pieces of the puzzle?” That is because they assume the personal details form the critical components. But in fact, even an aggregated, anonymized form of the data could still form a complete picture for others. These could be people in different markets and industries, like economists, analysts or investors looking to identify patterns and trends.
In addition, new tools and technologies have made it easier and faster to extract, refine, enrich and anonymize this data. It is this process, enabled by technology, that helps to wring the maximum value out of a company’s data.
The early adopters in the use of alternative data, institutional investors, are rapidly increasing spending to acquire information that helps them make better decisions. Unlike advertisers, they have absolutely zero interest in personally identifiable information (PII). What they want is empirical, anonymized data that tells them how companies and markets are performing. How many beers are being sold by Heineken across Europe this quarter? Is Deliveroo seeing more orders than UberEats? Economists and analysts have strict compliance procedures and actually demand that the data they buy are stripped of consumer-level data.
Service providers are well-positioned to capitalize on the rapidly growing opportunities to leverage their data in the digital economy. But there shouldn’t be a tug-of-war between monetization and privacy. Forward-thinking firms will understand how they can turn their data into profit while having the utmost respect for privacy.