Big Data Heaven and Hell

By The Enforcd Team

2018 has been a year in which big data is everywhere. As the amount of information cascading into the business world surges, there is almost no part of operations which are unaffected. One of the most under explored, but fascinating, areas could be its role in creating a more sustainable and responsible approach to business.

Data and regulation

In the short term, big data is already being used as a compliance tool for both financial institutions and regulators. Corporations can use data to monitor and demonstrate compliance across business operations. For example, it can avoid the risk of rogue traders by monitoring trading activity and flagging any behaviour which seems suspicious. They can also quickly compile reports, delivering a clear data trail for regulators demonstrating that they have – at the very least – made every effort to comply with the rules.

Moreover, it also makes it easier for organisations to see and manage the data they handle. Greater control and visibility will be crucial in staying the right side of new regulations such as GDPR and MiFiDII.

Regulators, meanwhile, can use it to save money, speed up operations and make it easier for the to spot non-compliance when it occurs.

These are all the low hanging fruit – gains which are relatively easy to achieve with existing practices and technology. As we move forward into the future, big data has the potential to change every part of our world – either for the better or worse.

Utopia or dystopia

Back in July, the FCA’s Charles Randall highlighted the perils of what he called an algocracy in which big data and algorithms start to control almost every aspect of our lives. We already encounter more algorithms each day than people. It governs the news we receive, the results of internet searches and in some cases, whether you can get a mortgage or a loan.

“This is why some have said that in the future we will live not in a democracy, where the citizens decide how we are governed, nor in a bureaucracy, where officials like me decide, but in an algocracy, where algorithms decide,” he said.

He paints a lurid dystopian picture that will be familiar to all fans of the Prisoner in which data controls us and our actions are controlled by all the information out there. He points to three points in particular:

  • Big data: the dramatic increase in the amount of information available about us
  • AI: The rapid evolution of artificial intelligence which makes it easier for companies to mine and use that data.
  • Behavioural analytics: All that data makes it easier to target consumers and deliver nudges which exploit their decision making bias.

All that, he suggests, could force us to rethink our attitudes to consumers from one of ‘caveat emptor’ which assumes everyone has all the information they need to make informed decisions – to one in which data increasingly subverts our ability to make informed decisions on the basic of the best information available.

Data utopia

This, then, is the dystopian vision, but the other side is Utopia – one in which companies can use data to support their employees and customers rather than to control them.

For example, by analysing when employees are logging into central systems, managers can see when they are working and how many hours. This can show if they are over working, working late or leaving themselves vulnerable to increased stress.

Behavioural analytics can also be used to spot signs of stress, anxiety or any other mental health issues, which can help them get the support that they need.
Moreover, all the available data on regulatory developments, and new trends can help compliance team identify the evolving demands of regulators and update their practices accordingly. By doing so it can achieve one of the FCA’s main stated goals of improving culture and working proactively to prevent non compliance before it arises.

The results will be a working environment which is more pleasant, a corporate culture which is more positive and a business model which is more sustainable. This is the world of big data utopia and it’s one that the financial sector and regulators should both be working towards.