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Data ethics: How we do right by customers in a digital economy

Data ethics: How we do right by customers in a digital economy

Source: Business Times
Article Date: 30 Jul 2020
Author: Richard Lowe

As part of ethical data use, it is important that each industry sets up a body that looks specifically at ensuring the responsible and sustainable use of it.

DATA is the rails on which the digital economy runs. As more areas of our lives become digitalised, the proliferation of data being generated and data being stored will only continue to grow.

In the digital economy, data is a raw material. How we use data will define us as individuals, as a business and as a society.

As digitalisation impacts every aspect of the way we live and work, the traditional silos of data usage and storage will continue to be broken down. Take, for example, the data we generate when we track our exercise and steps or when we log our calorie intake. We can choose to share these same sets of data with a variety of third parties - from health and wellness apps, to our doctors, insurers, and many others who are then able to use it to provide us with personalised products and services.

In the Asean region, we are still at the early stages of our data journey. We have the opportunity to start the journey on the right footing by championing a common set of principles on how industries can use data responsibly. These principles should set a standard that guides companies as they balance data-driven customer innovation with ethics.

As part of ethical data use, it is important that each industry sets up a body that looks specifically at ensuring the responsible and sustainable use of it.

Ethical data use can be broadly categorised into three areas - that it is consistent with human rights, that it aligns with the laws of the relevant jurisdictions, and that it upholds the trust that customers place in industry players.

Charting the grey areas

What is the responsible way of using data for businesses? This question alone is more complex than it may seem at first glance, and that is why it is important for organisations to come together and agree on a set of data principles and benchmarks.

For example, in the area of credit assessment for financial institutions, some may argue that certain socioeconomic data sets - such as residential addresses - should be excluded from credit scoring models, as this could lead to unintentional bias.

However, summarily forbidding the use of such data sets without due consideration and discussion may lead to similarly unintended consequences. In the case of credit assessment, it could result in the over-extension of credit to customers.

As part of Fair Dealing guidelines, financial institutions must ensure that they are acting in their customers' best interests. In the area of credit scoring, over-extending credit to customers who may not be able to repay the debt can place emotional, mental and fiscal stress on them. Defaulting on their loans would also lower their credit score, which would in turn affect their ability to access other financial solutions.

People are the drivers behind data analytics and AI

As we use data analytics and artificial intelligence (AI) for our businesses, it is important to keep in view the reason we are doing so - which, for many of us, is people. Whether by using AI to serve customers better or to enhance work processes so that our employees can do more and do better, technology should be an enabler for people.

When customer data is being used to build data models, having a customer-centric mindset will ensure that their interests and privacy are protected. Businesses must be transparent - show customers that the company's data governance, policies and processes meet and even go beyond the laws of the jurisdictions in which they reside and the company operates.

Captains of industries lead by example

Because data is used across businesses and purposes, companies must link arms with others in the industry to ensure that there is a common standard for using data that protects human rights and the rights of consumers.

UOB has set up a multi-disciplinary data ethics task force to develop a governing framework, policies and processes that ensure the bank uses data in a responsible and ethical manner. We are sharing the lessons that we have learnt on the application of data ethics in real-world situations with others in the banking and finance industry through the Monetary Association of Singapore (MAS) Veritas Consortium, of which we are a founding member. Veritas aims to develop a framework to which all in the industry can refer to ensure fairness, ethics, accountability, and transparency (FEAT) in the use of AI and data analytics in finance.

The Veritas Consortium is a good example of how industries and regulators can partner to ensure they have the right foundation upon which their data-driven initiatives are built. There are also many similar initiatives around the world that are government-led or industry-led.

If your industry does not have a body that champions the ethical use of data, take the lead. When it comes to the adoption and use of data, doing right by and for customers is the responsible and sustainable way to do business.

  • The writer is chief data officer of United Overseas Bank

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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