Ethics and Data - A Powerful Partnership

Senior Business Analyst, Financial Crime
How can financial institutions and government departments reassure customers/citizens that they are using their data ethically?
Data EthicsIt’s the big question that many financial institutions and government departments are struggling with: how can they reassure their customers/citizens that they are using their data ethically? This is about far more than simply how to acquire the data, store it and keep it safe. With so much information freely available – credit reference and social data, for example – the ethical dimension to how this is handled is critical. An ethical stance will govern how the customer is treated, with fair and proper decision-making based on appropriate evidence. Anything less can result in severe damage to consumer trust and an institution’s reputation.
At the heart of the data ethics conundrum sits the expanding swathe of start-ups and data services. These offer organisations low-cost flexible services to access and scrape social media. There’s complexity around the data protection aspect, of course, because you need to be entitled to retrieve the data. But there is far more concern about the data’s ethical aspect once it has been retrieved.

Subjectivity and biased decision-making

Those collecting and using such data en masse risk skewing and biasing any subsequent decisions based on that data. Then there is the further ethical question around the age of any data and the ‘right to be forgotten’: is that data relevant, even ‘admissible’, and should it be used to make a behavioural/evidential decision about a customer?
With a lack of formal regulation and legislation in place over the use of open source data, the risk is that subjectivity and bias may influence such decision-making when it comes to something even as fundamental as acquiring a credit card or insurance policy. Here’s how that bias might work in action. You discover a fraud case, based on a particular characteristic. So, going forward, you employ analytics to seek out that characteristic specifically. However, this limits your ability to find activities you are not looking for and biases you into assuming the same known characteristics will indicate a fraudster.
For example: a trend indicates a high fraud rate has been seen amongst people with green eyes aged 28-30, living in thatched cottages. This, albeit helpful to know, in no way guarantees those specific characteristics actually define any fraudulent behaviour. It is those behaviours, and the motives behind those behaviours, that drive fraud, not personal or social attributes. It is here that you risk poor decision-making through a failure in the accuracy and applicability of analytics. Data ethics can underpin effective decision-making processes, while eschewing human or statistical subjectivity.

Making the right decisions

Conversely, by using data ethically, customers are treated fairly, helping them to make the right decisions for their business by not keeping good customers in a bad process – due to a misinterpretation of data and decisions that emanate from that, for instance. This ethical approach is not only to be encouraged, but essential. It will drive up consumer trust and confidence, resulting in better customer retention, cross-selling opportunities and the capability to gain additional market share.
So where does data ethics start? It needs to be both a corporate and executive level initiative and not one that is left solely as the responsibility of the analyst. Seek out a vendor who understands this; one that accesses appropriate data, understands its use within the industry and applies it to leading technologies. In essence, a vendor that recognises the vital importance of an ethical stance when it comes to data and makes analysts consider the consequences of data misuse in the quest to develop accurate, applicable and evidential analytics.
Creating an ethical framework and management structure around data to ensure it is always used fairly and impartially will win customer trust and undoubtedly serve to enhance the reputation – and success – of your organisation.
For more information about data ethics read our related blog post:
Alex Johnson Senior Business Analyst, Financial Crime 26 July 2017