Tapping into the shared value of data

Organisations are sitting on a trove of valuable data, but viewing these insights in isolation could be stifling progress. A new push for open innovation is helping businesses level-up together
Adv Di Bcg

When open banking came into force in the UK in 2018, the idea was to make it easier for customers to compare banking services and encourage competition among banks. Since then, an entire ecosystem of financial technology businesses has emerged, underpinned by data sharing through open banking APIs. The success of open banking has not only helped reshape the industry but has also highlighted new opportunities for organisations to collaborate on data and embrace open innovation.

“There hasn’t really been a consensus on how to do this until open banking set the benchmark for this federated approach to data sharing,” says Jamie Ingram, engineering director at BCG Platinion. “There’s now a snowball effect with open banking as a blueprint for how data can be exchanged securely to facilitate innovation because we now know it works.”

The first step in this process is identifying potential use cases that can create value for the business and its customers and drive societal change.

Tom Howe, lead engineer at BCG Platinion, explains: “Once they have identified that use case, they need to source the data. We encourage organisations to look inwards as they may already have useful data available but don’t know how to access and use it. There are then steps they can take to look outwards to find the data they need.”

He adds: “By actively engaging in, supporting and contributing to existing open and shared data initiatives, they can really engage in this idea of collective action. They can establish partnerships, collaborate, and can even orchestrate their own ecosystems.”

Sharing data can support companies’ net-zero initiatives. The CO2 AI Product Ecosystem, developed by CDP and CO2 AI by BCG, is an AI-enabled platform that allows all members of a company’s ecosystem to exchange product-level data, empowering organisations to understand their carbon footprints and meet their carbon reduction targets.

There’s now a snowball effect with open banking as a blueprint for how data can be exchanged securely to facilitate innovation because we now know it works

“There is an absence of data around what companies might need to move to net zero,” says Howe. He highlights data gaps that companies may be overlooking, which could help build cleaner supply chains or provide input to algorithms to reduce scope three emissions. “There are huge opportunities to discover data that helps design better places to live and work,” he adds. “We have applied this thinking to improve last-mile delivery services, reducing congestion in city centres and making e-commerce more environmentally friendly.”

By accessing shared data, organisations can create new product lines or develop services that would not otherwise have been possible.
However, there are several barriers that organisations must overcome before they embark on their open innovation journey.

“Companies tend to silo their data. They really don’t want to share it because they think they’ve got all the value,” says Ingram. “The reality is they can’t tap the value themselves because it’s locked away.” The insights must also be augmented from other sources to meet their full potential.

Trust and privacy concerns are key barriers to overcome when handling personal data or intellectual property. Existing and emerging technologies can enable responsible data sharing for a broad range of circumstances beyond banking, Howe says: “It makes sense this standard is being adopted in similar scenarios around the world as APIs are so widely used and understood.”

Where privacy concerns are more acute, new privacy-enhancing technologies could allow partners to process data remotely without ever seeing the original data. This is especially significant in areas like medical research, where patient confidentiality is paramount. “The important takeaway is these approaches facilitate the sharing of data which may have been considered too high risk in certain settings,” explains Howe.

Fear of competition can be another significant barrier to open innovation. For example, some companies fear that they will somehow be at a commercial disadvantage if they give data away.

“Companies with a particularly strong drive or vision will always win out, and if you have something that you know is unique, you should be confident in that,” says Ingram. “Underpinning that will be layers of capability, and it’s those capability layers which are the shared element. You’re not open-sourcing your company IP but piggybacking on the shared capabilities of the collective. It gives you more opportunities than you would have potentially had before,” he concludes.

One example of data collaboration in action is BCG Platinion’s collaboration with Transport for London and Delivering London. The aim was to improve last-mile delivery services by reducing congestion in city centres and making e-commerce more environmentally friendly. By encouraging industries to share data through an ecosystem of partners striving for the same goals, that partnership can better design solutions and then work towards achieving them - in this case, by creating a more efficient delivery system.

With new initiatives often dependent on effective regulation driving change, compliance can also be a potential obstacle. To that end, the European Union has introduced the European Data Act, designed to make more data accessible while regulating who can access it and for what purposes. The UK is also pursuing a National Data Strategy to use data more effectively to boost productivity and create new jobs.

“There seems to be a shift towards applying the success of smart data initiatives like open banking to other industries. It’ll be interesting to see where these go. Public awareness and consent around data sharing have to be a priority,” says Howe. “In the UK, there is a discussion about what that might mean for how the NHS ‘stewards’ citizens’ data, and how AI will be safely regulated in healthcare.”

The result of this push for open innovation and data sharing initiatives is to create better products and services and extract better insights to make more informed decisions. But for this collaborative approach to data science to have a positive impact and drive societal change, ethical considerations are crucial.

“There is a slight tech utopianism to all this. It’s naïve to assume that everyone is in it for the right reasons,” says Howe. “That is why privacy and ethical concerns are hugely important. You only get fairer and better services if this is the top consideration. There’s a big difference between what’s legal and what’s ethical, and so what’s ethical will become a bigger part of the conversation in the future.”

Find out more about our deep technical expertise on bcgplatinion.com