New ideas for the data economy
Scott Farrell: Similarities in risk profiles between the finance and data sectors
If Australia wants to build any public confidence in the growing data economy, it needs to have structures and protections – some of which can be borrowed from other important systems, like the financial system, according to Scott Farrell, partner of King and Wood Mallesons.
Mr Farrell, who will present at the upcoming InnovationAus.com Dataconomy Sydney forum says there are important similarities between the data and financial sectors that can help the private and public sector navigate their way around determining how policies for the data economy should look like.
“The data economy is not just about data sharing, but it also deals with managing the flow that information and the risks if there are interruptions to it. It’s also about creating a system that is robust and resilient, and actually works,” he told InnovationAus.com.
“In creating a data economy, we won’t know everything that could happen because so much seems new. If you consider things that work for money-based systems, you know at least they’ve been tested, and how they deal with risks when they arise.
“For example, the movement of money and movement of information about money have alot of similarities in relation to the risks and sensitivities that are involved.”
Mr Farrell, who led the federal government’s review into open banking, believes educating people about data needs to happen as part of developing a framework around the data economy.
He said misunderstanding the value data can deliver is a key challenge faced in creating a data economy. This makes it harder for people to make responsible decisions about who they’re sharing their data with or what data is being shared.
“People who make decisions about sharing their data may not be applying the same caution as they do about decisions in relation to sharing their money," Mr Farrell said.
"This can be because of the perception that the information is not valuable, so they don’t make the same decisions as they would for something that’s valuable."
“Education would be helpful so that people understand their data does have value and it’s worth making responsible decisions about it.
“I don’t think you can have a successful data economy if the primary source of data is not aware of the value it provides, and as a result is not able to make responsible decisions.”
The government can facilitate part of the education process, said Mr Farrell, but it needs to be broader and involve a diverse group of people.
“It’s important we have real interchanges of ideas between the public and private sector. They shouldn’t be separated because if they are cooperating towards a common goal, they can produce ideas that work well.
“It’s harder to create a comprehensive policy on something if you’ve only got people from a single background. It works better when you have diversity in the decision-making process.
Once people understand the value of their data – a fundamental part of the Consumer Data Right – it’s more likely they will want to engage with the data economy, Mr Farrell said.
For instance, people may choose to combine their energy and banking data to understand if their service providers are giving them the best deals. Or, they could use the data they have to gain insight into their own decisions to help them make better choices.
“What the CDR can do for Australia’s data economy is it puts the customer in the middle. It’s fundamentally important to people’s participation in the data economy that they are given control,” he said.
“The idea behind the Consumer Data Right is that data is only transferred when the customer directs it and that there are frameworks in place to ensure security, accountability, and reliability. It allows people to engage with the data economy with more confidence, rather than worrying about what’s going to happen.”