-“Data is the new oil.’’- Clive Humby
However clichéd the saying seems, there is no denying its absolute truth, especially in today’s digital-first economy. Raw data, in itself, like unrefined oil has little meaning. The real value are the insights derived from integration of disparate, isolated and vast data sets through analytics and application of AI, ML technology tools. We shall look at the key trends in the data space that are fast-forwarding the digital transformation landscape.
The rise of data exchanges
By 2022, 35% of large organizations will be either sellers or buyers of data via formal online data marketplaces, up from 25% in 2020.- Gartner
The data marketplaces concept received a fillip when the Government of India encouraged data transparency and digitized its databases as part of the Open data initiative. Data marketplaces are a one-stop platforms that offer single-point, consolidated access to disconnected third-party data sets. For example, a bank or a lender would benefit immensely as part of risk management by obtaining data related to a borrower’s credit history with identification of payment defaults. Gartner opines that the advantage that these data marketplaces offer is to ‘create economies of scale to reduce costs for third-party data’, with data-as-a-service offering an interconnected data ecosystem, expected to witness increased adoption in the coming days.
A BCG report highlights the key players operating in the data business globally:
Throwing light on the Information ‘Dark Space’
Data is a double-edged sword. Data in the wrong hands can be misused and has resulted in a spate of cybersecurity breaches including huge monetary losses for institutions, economies and individuals. However, monetization of data assets for ecosystem stakeholders with the purpose of enhancing credit to the genuine borrowers, enabling lenders to drive higher credit penetration levels and building trust amongst business vendors is a step in the right direction.
‘’Today, fewer than 50% of documented corporate strategies mention data and analytics as fundamental components for delivering enterprise value. By 2022, 90% of corporate strategies will explicitly mention information as a critical enterprise asset and analytics as an essential competency.’’-Gartner
A CREDIWATCH study highlights the magnitude of the information ‘dark space’ in India and the monetary repercussions. ‘’India has 50 million plus unregistered businesses and 1.13 million active registered companies but a mere 7000 of these are listed offering detailed disclosure while the rest exist in the realm of Information ‘Dark Space’. There is an estimated 100 billion annual business entered with these ‘dark space’ companies as a combination of credit, trading and other agency related activities. Business with these companies results in revenue leakages of INR 50 to 100bn annually due to challenges of identifying the right client/ lead, tracking these clients, associated risks of bad debts and fraud.’’- Meghna Suryakumar, CEO, CREDIWATCH
Data governance reforms are the need of the hour
The Personal Data Protection Bill, 2019, once passed in Parliament, is expected to resolve existing anomalies, and strengthen the data framework with fair and transparent methods, through a legislative backing. A Grant Thornton report summarizes the broad aspects of the Bill:
Data segmentation into personal identifiable information, sensitive personal information and critical personal information would provide a further safeguard against data privacy violations and ensure higher accountability during data processing with implementation of robust technology architecture and security controls. Non-compliance with regulatory stipulations namely illegal data sharing without consent, non-reporting of data breach or failure to act upon violations would be met with stringent penalties as mentioned in the Bill.
- Personal identifiable information includes data that would help identify an individual. These may comprise full name, PAN details, bank a/c number, email address etc.
- Sensitive personal information would include passwords, monetary related, payment credentials like card details and medical records etc.
- Critical personal information: The Government has the broad discretion to define without any limiting criteria
Key focus areas of the Bill would broadly cover the following:
India is already witnessing a data boom, with huge volumes of data collection, consumption, processing, analysis, storage and retrieval. A PwC report indicates that currently over 3,800 FinTech players are in the business of tech-enabled services that make heavy use of data and analytics as a critical input to generate insights for business and consumers. The passage of the bill would give teeth to the legal recognition of data as an asset rather than a transactional commodity and potentially contribute to establishing India as the world’s largest data refinery.
Empowerment through data
The goal is to turn data into information, and information into insight.” – Carly Fiorina, Hewlett Packard
Ultimately, harnessing data requires a mindset change from within the organisation at all levels. There is huge scope to realise the benefits of automated, real time data access, transformation into insights through advanced analytics and accurate reporting for improved decision making. While there is no dearth of data, the key is to design processes, structure operations and implement policies within business enterprises to derive tangible gains from granular level insights. For example, CREDIWATCH‘s insights platform offers customers with multiple value-centric functionalities that can be integrated across applications. While the Trust Score provides an understanding of the creditworthiness at a particular point of time, Early Warning System red flags exceptions through detailed due-diligence to mitigate credit risk incidence.
Broadly, the two key parameters that govern data usage are access and degree of control with higher the value of the data, the greater is the necessity to control or restrict access.
A data-driven world for tomorrow’s agile enterprises
In times to come, besides product or service differentiation, dynamic access to information would provide a competitive advantage to business enterprises. This is especially valid in the context of SMEs that need to rapidly imbibe flexibility in order to scale business performance, obtain critical bank funding for capital expenditure, engage with a new vendor or win customer trust, all of which may best be achieved through absorbing new-age technology tools with predictive analysis that offer access to coherent data across segments, including those from external sources.