Personal Data Protection: Everything Businesses Must Know (and How DaaS Can Help)
It’s no secret that we’re living in an age where data is king. The importance of collecting quality customer data spans across industries, influencing business decisions in every sector from financial services to real estate, wellness brands, and more.
Increased access to personal data helps businesses create more personalized offerings and relevant products for their customers. And for many businesses, getting access to this data is essential for onboarding and validation.
However, as a business owner, you probably already know the risks and challenges that come with all this sensitive data. It also opens up a wide range of questions and concerns around the protection of personal data as the Data-as-a-Service (DaaS) industry grows and businesses look for new ways to collect and leverage customer data.
So, what is the personal data that has grown to be such a valuable commodity today, and why are businesses so eager to collect more of it? And are there ways for the DaaS industry to be re-imagined in a way that promotes better protection of personal data while providing the same value and benefits to companies? Continue reading below as we dive deeper into this growing issue, and take a look at how consumers can regain their privacy online. By the end of this in-depth article, you’ll feel more confident on how to navigate personal data protection during onboarding and identification.
What Exactly is Personal Data?
First, let’s discuss what we mean by personal data.
Personal data refers to any information that can be related back to an individual. This can include simple data like your name but can get as deep as an IP address or cookie identifiers. Essentially, if you can identify the individual based on the data you have, it can be considered personal data. When it comes to the personal data we’re going to discuss today, think of social security numbers, birth dates, addresses, genealogy, etc. In some cases, you’ll collect biometric data – like a thumbprint, iris scan, or facial recognition.
The collection of personal data on the internet contributes to a person’s digital identity. And with the more time spent online, the more data that gets collected and the larger digital footprint a person creates for companies to utilize. Your personal data can be used for fraudulent purposes if accessed by the wrong people. That’s why this topic is so important. With all that said, let’s discuss where personal data comes from.
Where Does Personal Data Come From?
The discussion around a person’s digital identity may beg the question of where personal data comes from in the first place. As we mentioned above, the more someone uses the internet, the more personal information they release out into the world that could be compromised at some point.
Even still, personal data originates as each of us navigate through our daily lives–both on and offline. So by simply shopping, traveling, texting, or banking, valuable information is being recorded about us and collected by data aggregators to resell to other organizations to be exploited for their use–mainly to sell you things. Anytime you apply for housing or go to buy a car, you’ll be forced to provide even more sensitive data – like banking information.
So with billions of people around the world, it’s easy to see how much data is being produced every second of every day. This has proven to be very valuable for advertisers and any company trying to sell you their products. It’s even estimated that the volume of data in the world will reach 175 zettabytes by 2025–which is one sextillion bytes, or 1,000,000,000,000,000,000,000 characters!
The Power & Responsibility of Personal Data Protection for Businesses
Although personal data is now the lifeblood for nearly all businesses, there is still a mountain of power and responsibility that comes with this. Just as individuals need to be aware of the privacy ramifications of their personal data online, businesses also need to pay special attention to the protection of data when interacting with customers. After all, as individuals, we’re relying on the security of the companies that we entrust our personal data to keep that data safe and secure.
In recent years, there has been mounting public scrutiny and government intervention around how companies can collect and utilize personal data from consumers. Some of the more monumental rulings include GDPR, CCPA, and the EU Data Governance Act . As the laws at the national, international, and state levels catch up with technological advancements, personal data is now being viewed as a personal asset of consumers. These days, you have personal data rights. Your data is no longer just a commodity to be used by corporations.
Plus, as system breaches and leaks become more common, there is no doubt that regulators will continue to crack down on these cybercriminals and tighten restrictions even further. At the same time, online users and consumers are also making it a point to claim back some of their online privacy and gain more control of the terms of access to their personal information.
What is DaaS (Data as a Service)?
Before we continue our discussion about personal data protection, let’s cover what the Data-as-a-Service (DaaS) industry is. This is the next generation of the existing data analytics services, and involves two or more parties buying, selling, or trading digital data.
At its core, DaaS providers look to collect and analyze data from a variety of sources to extract or unlock valuable insights and information. While all businesses today are reliant upon consumer data to some extent, they often struggle to collect the data that’s valuable or find actionable insights from this information in a way that will help them make profitable business decisions.
Thus, DaaS was born as the production and collection of personal data has grown immensely over the past decade, and has become increasingly valuable to businesses.
The Current DaaS Model: How it Works and Why it’s Problematic
With a better understanding of what the DaaS business model is, let’s take a deeper look into how it actually works and the current problems facing the industry.
How the Current DaaS Model Works
DaaS has become so popular because it gives order to the mountains of consumer data available today and makes it accessible to businesses for their own use.
With the current DaaS model, there are three parties involved: the data providers, the data consumers, and the data subjects.
As we discussed above, data subjects are all the individuals going about their lives and producing personal data as a by-product of their day-to-day interactions. Data providers, then, are the DaaS entities who collect, aggregate, and analyze this data from the source. At this stage, data quality is the highest since it’s taken right from the source and has not yet changed hands.
They will then package and sell this data to other organizations who don’t have direct access to collect such data. The buyers may be the data consumers who are the end users of the information, or they will re-package it after combining it with data from other sources to be sold again at a premium.
This data will continue being sold and transferred until it reaches the final data consumer, likely a consumer-facing company, who wants to access the data to leverage in their own business to make more profitable business decisions.
Why the Current Model is Problematic
With the current model, there is the potential that further insights can be gained as data is aggregated with information from other sources. On the other hand, data quality could get worse as it moves away from the original source, which can occur for a variety of reasons. Thus, the protection of personal data quickly becomes more complex the more the data is bought and sold.
There are a number of factors that are complicating the accuracy and efficiency of the current DaaS model. These include:
- Sizable privacy and security risks: both consumers and businesses face large risks from breaches or hacks as sensitive personal data is collected from individuals, stored by the businesses utilizing the data, and transferred between entities as it is bought and sold
- Incomplete and erroneous data sets: as data is transferred and sold between parties there is the potential for it to become compromised and lose its quality and accuracy
- Growing regulatory constraints and compliance risks: rising pressure from government regulators mean stricter compliance measures, which may increase costs for businesses and limit how they are able to collect and leverage consumer data
So no matter if a company is involved in the capture and collection of personal data, or purchases multi-source raw data later down the line, they can be subject to a multitude of security, legal, and data-related issues that can influence their internal systems and how they make crucial business decisions.
The fact of the matter is, when data moves beyond the source and spreads across end-users down the line, there is a high possibility for the data to become tainted by different landscapes, server farms, and the cloud. This leads to unreliable data sources that can negatively impact the quality of the business insights that can be gained.
Not to mention, the worst potential outcome is that the data gets compromised and firewalls are breached by hackers, exposing millions of sensitive data points of customer information to cybercriminals. So with increasing regulatory pressures and looming compliance issues, how will the DaaS paradigm change in the coming months, years, and beyond?
How the DaaS Paradigm is Changing
The insights and value that can be gained from personal data are tantamount to our modern economy, so finding a solution to the above mentioned challenges has been crucial. So, it’s obvious that DaaS isn’t going anywhere. What we do know, though, is that there is an active shift across the DaaS space. The way the business model operates is changing – for the better. Even though the trajectory of the current DaaS business is likely unsustainable, there are ways to keep the model valuable for all stakeholders. Here’s what you need to know.
How the New DaaS Model Works
This ongoing shift in the DaaS space has to do with where sensitive personal data is stored, and how insights are shared between parties. As you have learned so far, the more data changes hands, the more possibility there is for it to become tainted and lose its quality. Plus, storing and collecting data also opens businesses up to a wealth of compliance risks and added costs in order to keep up with the ever-changing regulatory landscape.
Businesses no longer have to navigate the barriers that come from transferring data across organizations; rather, accessing open algorithms (OPAL) can be the solution. So even as the need and demand for more data continue to grow, there are ways around the traditional barriers and disadvantages in the space.
Thus, the DaaS model can shift from selling and trading raw data, which can already be limiting and risky, to sharing insights instead. In this new model, all algorithms are significantly vetted by experts to deem their legitimacy and accuracy, and the actual data never leaves the original provider.
Benefits of the New DaaS Model
By moving away from collecting and storing customers’ data, businesses can still rely on the valuable insights of data stored elsewhere to make informed business decisions, without the risky exposure to data breaches and hacks.
Overall, this shift is a win-win for companies, allowing them to continue gleaning insights from customer data for their own personal use to see upward sales potential, but without the heavy compliance factor and additional costs for data storage and protection.
With this new model, there are more than just monetary costs that are being eliminated. The reputational costs that come from experiencing a data breach or hack are immeasurable. Fortunately, in the new DaaS landscape, businesses don’t have to worry about exposing themselves to these costs or risks.
The benefits to be gained from this new DaaS model can be summed up with the following:
- Access to higher quality data and insights
- More security and privacy of personal data and data subjects
- Lower compliance risk exposure
Introducing FortifID: an Authentication & Onboarding Solution That Prioritizes Personal Data Protection
The protection of personal data will continue to be a major focus point among both businesses and consumers in the coming years, even as the DaaS industry continues to grow and become more sophisticated. So even though the industry will largely move away from the collection and storage of personal data, these security and privacy principles around data subjects are part of the reason behind this shift in the first place.
Here at FortifID, we are transforming the validation and digital customer onboarding process for financial institutions, crypto exchanges, and property management businesses. We help these businesses protect the digital identities of their customers, with a larger mission of making the internet a safer place for everyone to enjoy. Here are some of the features of our solution:
- Identity Verification: a comprehensive KYC solution for your Customer Identification Program (CIP)
- Income Verification: instantly access income-related insights on customers to optimize friction and time-to-decision
- ID Verification: reduce digital fraud by verifying a customer’s government-issued ID in real-time with a face-match selfie and checking for liveliness
- AML Screening Software: streamline Anti-Money Laundering (AML) and compliance checks on customers and quickly assess the applicant’s email, synthetic, or identity fraud risk
- Employment Verification: easily verify employment records to increase approval rates and reduce the cost to acquire
- Business Verification: meet KYB standards by verifying and authenticating business legal entities (BLEs) and their ultimate beneficial owners (UBOs)
With our products, businesses can be sure that they are protecting sensitive customer information from the risk of a breach–because it’s never getting stored in the first place. This keeps all critical information safe from any data breach or hack, which can be costly and devastating.
For any modern business owner, keeping your customers’ digital information safe and secure will always remain a top priority, so visit our website today to see how FortifID can help you do that.