It’s always a delight to read a thought-provoking article in a news magazine you admire and find an unexpected reference to the good work your company is doing.
That was my happy experience earlier in the week, when the article, with a snappy tagline of ‘Should our bankers and insurers be our Facebook friend?‘ had already drawn me in (headlines like Big data, financial services and privacy have a tendency to do that.)
The piece is an explanation of what one contributor calls “an intensifying data arms-race in finance” – or the fact that additional factors, such as posts, language and tone on social media posts, are increasingly being used to help decide insurance premiums.
As ever when data is scattered freely without thought for potential consequences, having someone delving in your digital life that you didn’t expect to see there can go either way.
As the article explains: “Data can improve predictions of whether someone will fall ill or drive into a tree. Good algorithms are faster and cheaper than underwriters. Insurers also claim that the better they know customers, the more they can help change bad habits.”
Good potential use case -the insurer finds someone is about to do a bungee jump, but his or her life insurance policy doesn’t cover this – cue offering an add-on for a more tailored product.
But, as ever, there is a flip side as well: “The riskiest customers, and those offline, might be priced out. The more the industry relies on complex—and proprietary—algorithms, feeding machines that keep learning, the harder it will be for customers, and regulators, to untangle why they were rejected. ”
As the article makes clear: “Algorithms can be wrong. A bilingual speaker’s search-engine entries could look erratic; a social-worker’s location-tracker could imply a risky lifestyle.”
And since it is unclear how judgments are made, says Frederike Kaltheuner, from Privacy International, “you could get stuck in a Kafkaesque situation where you’re put in a certain box and can’t find out why, and can’t get out.”
While regulation, and indeed customers themselves, have a role to play in this, it is technology that will ultimately find ways to make this work for all parties. And that is where digi.me comes in.
“New businesses that give people more control over data, such as digi.me, which lets users share data only with those they want, hold promise. If such tools help users become their own data-brokers, they may be willing to share more data with their mortgage lenders or insurers,” the article states.
“But trust will truly be earned only if financial firms, old and new, get ahead of the game and start talking to customers about what’s really going on behind their screens.”
So, ultimately, leaving the customer out of the equation while mining their data is going to fall out of favour, and fast.
The individual at the centre of their connected world, as in the Internet of Me model, in control of their data and what happens to it, is very definitely the future.