Personal data stores are the next big thing - and have been for the last decade. David Reed looks at what it will take for this concept to become a commercial reality and whether the harsh realities of the data market will ever allow these services to take flight.
Does Barclays know something its competitors don’t? To relatively little fanfare, the bank recently launched Cloud IT - an online document management service where customers can store their bank statements, insurance documents and even identity papers, such as passports. Half personal data store, half virtual personal organiser (pay this bill, renew that insurance) it is all the more surprising that no other major corporate has so far made a play in this space.
Personal data stores (PDS) have long been talked about as a logical outcome of the need to manage multiple online relationships with service providers. There is one key difference between the PDS concept and Cloud IT, however - true data stores are about mediating those relationships by controlling which pieces of personal information are made available to those commercial organisations, rather than simply managing key data in one place.
A quick search will reveal that, while brands have yet to move into this space, it is far from under-populated. “It is like another week, another start-up,” says Alan Mitchell, strategy director at Ctrl-Shift which advises both business and government. “It is becoming a hot area and organisations are piling in. What we’re seeing is like the Cambrian explosion when millions of wonderful lifeforms emerged - and a few of them survived.”
Just as that wildly-divergent natural abundance ultimately settled down into the major families of creatures we now recognise, so the marketplace for PDS is likely to evolve. Mitchell says that significant differences can already be observed in the business models being adopted. “They all start with the idea of the individual having control over their own data, then they develop in many different directions,” he says.
Ctrl-Shift has identified ten core functions that are being provided across this space, from understanding which companies already hold data on the individual through to the “quantified self” of releasing selected information to specified companies. What differentiates between the dozens of stores created is where the emphasis lies, be it ensuring the security of personal information or creating a value from it.
“There is an important debate to be had about the different types of value to be had from data - exchange value and use value,” says Mitchell. Most of the PDS launches have focused on the notion of an exchange between the individual and a business which may generate an explicitly monetary return for the data subject. “Nobody knows yet what the real exchange value of that data will be.” A high-value investor indicating an interest in creating a new portfolio might expect to command a premium of several hundreds of pounds, whereas a simple name and address are worth fractions of a pence.
Exchange value is already in operation, for example in social networks where consumers gain free access to services in return for providing their personal information. “There are interesting business models there to be created - but scale is one of the hurdles to overcome,” says Mitchell.
Scalability operates on both sides of the PDS model as a drag on the success of developments so far. To draw in brands to participate in value exchanges, the stores need significant volumes of active users. To gain those users, they need to be able to offer engagement with enough brands. It is a Catch-22 situation which none of the providers has yet managed to resolve, even though the market has been trying to find the solution over the last decade.
PIB-d is one of the digital exchanges which started life intending to offer consumers a mechanism for controlling their volunteered personal information and also to trade it with organisations. “It was aimed at taking things like qualifications and digital identities - any information about an individual - and allowing them to choose a personal information broker from a managed market,” says founder John Harrison.
He notes that the focus of other PDS providers has tended to be too narrow. “We see point solutions being developed to handle bits and pieces of that, but they fail to become general purpose because they don’t scale well,” he says. Commercial data owners also tend to put up barriers. “Most of them have a business model based on getting and keeping data - they are not interested in sharing it with others.”
In the public sector, however, there is more of a public interest driver behind exchanging information effectively. “If you think about education, one of the requirements is a portable personal education record that school and college leavers need to show as their qualification when they apply to university and ultimately for work,” says Harrison. As a by-product, this can become an online proof of identity as well as an exchange for marketing data.
A join venture between his own business and a number of higher education bodies, such as the University of Hertford, PIB-d has already completed an initial feasibility study and is now working to build consensus across key bodies in the sector, including The Cabinet Office, Department for Business, Innovation and Skills and the Department of Education. “We have spent the last 12 months lobbying and arguing the case. All it requires is a willingness to do things differently,” he says.
Just as brand owners have a culture of possessiveness towards personal information, so education providers tend to exchange information on an individual’s history and qualifications through their back offices without including the person in that process. Another challenge is the Learning Records Office, set up in 2006, which has become embedded in higher education as the provider of the unique learner number (ULN). Says Harrison: “We say, if you give the individual proper control over their own data, you don’t need that ULN.”
To complicate the picture, universities are their own awarding bodies, whereas schools and colleges use a range of external organisations, such as Edexcel. The National Careers Service, which most graduates use to help them find work, additionally makes use of a commercial identity provider.
It is a complex set of links, although students have a simple interest - maintaining a consistent record of their education and proving their qualifications across a decade-long path through the system. “To make this work, civil servants will have to think outside of their silos,” admits Harrison.
Handshake is one of the latest arrivals in the PDS market following a self-described “long and tortuous journey” by its CEO and co-founder, Duncan White, involving technology development and takeovers leading towards behavioural science work for a major bank. “From that project, Handshake was born,” he says.
The fundamental insight which triggered the new business was that all successful human relationships are based on the principle of reciprocity - giving something and getting something back - and the principle of equity - that both parties make a “profit”, whether it is monetary or emotional gain. Where these are present, long-term relationships can be formed.
“If you are asking for personal data, you should respect these principles. Two years ago, we teamed up as a joint venture which went beta in October to build a platform for communications between brands and consumers and to negotiate around data in the broadest terms,” says White.
He notes that the business model does face the “multi-dependency” of getting sufficient volumes of participants on both sides, but is initially hoping to prove the concept in a test with up to 3,000 users. “There is only one opportunity to do this right,” says White. If the business can acquire this level of active users it will push on towards building mass adoption.
What Handshake hopes to do differently to other PDS providers is support genuine negotiations between both parties about the value of the data being provided. “There is a debate around what data is worth. There is a difference if you want 10,000 people to do something compared to if you want one individual to do something. You might offer them £10, they might ask for £20 - there will be a negotiation, but the brand has to make the first offer,” says White.
Over the course of many such negotiations, market norms will develop to help both brands and consumers fix the price of information. This will also flush out the real value of different types of data in driving marketing outcomes. As White says: “Companies are currently analysing a lot of previous behavioural data to predict the future. If we can throw intention into the mix, it will interesting to see what happens.”
“It is still early days. One of the problems we have is marketers being too analytics-centred. They say they already have a model which is performing well and they only want to get an incremental improvement. If we say test this - you may get a 50 per cent improvement, they don’t want to take that risk,” admits White.
Mydex sits at the opposite end of the spectrum, having been established in 2007 and been piloted across a range of public sector organisations, such as DWP, as well as commercial businesses, like Amazon and More Th>n. It is also a social enterprise, which means it has a very different business model to most of the other players in this sector.
On the back of its experience so far, the PDS has identified that ease of use and trust are the key drivers of adoption. As a source at Mydex says: “If you can manage a process easier and quicker, consumers will use it. If it is a hassle, they won’t bother. Trust comes after that - if it is easy, but you don’t trust it, forget it. If it is easy and you can trust it, it’s a winner.”
That’s true for brands as much as it is for consumers. For personal information management to work in practice, marketers need to gain better engagement and conversion than through other sources without any increase in their work load. If consumers get to access services more quickly or are rewarded for identifying themselves as prospects, they will also sign up. For the moment, there are plenty of service providers trying to make this equation work. Which ones turn out to be dinosaurs and which evolve into high-flying birds is still some distance in the future.