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The consumer-data opportunity and the privacy imperative





As consumers increasingly adopt digital technology, the data they generate create both an opportunity for enterprises to improve their consumer engagement and a responsibility to keep consumer data safe. These data, including location-tracking and other kinds of personally identifiable information, are immensely valuable to companies: many organizations, for example, use data to better understand the consumer’s pain points and unmet needs. These insights help to develop new products and services, as well as to personalize advertising and marketing (the total global value of digital advertising is now estimated at $300 billion).


Consumer data are clearly transforming business, and companies are responsible for managing the data they collect. To find out what consumers think about the privacy and collection of data, McKinsey conducted a survey of 1,000 North American consumers. To determine their views on data collection, hacks and breaches, regulations, communications, and particular industries, we asked them pointed questions about their trust in the businesses they patronize.


The responses reveal that consumers are becoming increasingly intentional about what types of data they share—and with whom. They are far more likely to share personal data that are a necessary part of their interactions with organizations. By industry, consumers are most comfortable sharing data with providers in healthcare and financial services, though no industry reached a trust rating of 50 percent for data protection.


That lack of trust is understandable given the recent history of high-profile consumer-data breaches. Respondents were aware of such breaches, which informed their survey answers about trust. The scale of consumer data exposed in the most catastrophic breaches is staggering. In two breaches at one large corporation, more than 3.5 billion records were made public. Breaches at several others exposed hundreds of millions of records. The stakes are high for companies handling consumer data: even consumers who were not directly affected by these breaches paid attention to the way companies responded to them.


Proliferating breaches and the demand of consumers for privacy and control of their own data have led governments to adopt new regulations, such as the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) in that US state. Many others are following suit.


The breaches have also promoted the increased use of tools that give people more control over their data. One in ten internet users around the world (and three in ten US users) deploy ad-blocking software that can prevent companies from tracking online activity. The great majority of respondents—87 percent—said they would not do business with a company if they had concerns about its security practices. Seventy-one percent said they would stop doing business with a company if it gave away sensitive data without permission.


Because the stakes are so high—and awareness of these issues is growing—the way companies handle consumer data and privacy can become a point of differentiation and even a source of competitive business advantage. The main findings of our research are presented below. We then offer prescriptive steps for data mapping, operations, and infrastructure, as well as customer-facing best practices. These can help companies position themselves to win that competitive advantage.

A matter of trust—or a lack thereof

Consumer responses to our survey led to a number of important insights about data management and privacy. First, consumer-trust levels are low overall but vary by industry. Two sectors—healthcare and financial services—achieved the highest score for trust: 44 percent. Notably, customer interactions in these sectors involve the use of personal and highly sensitive data. Trust levels are far lower for other industries. Only about 10 percent of consumer respondents said that they trust consumer-packaged-goods or media and entertainment companies, for example (Exhibit 1).


About two-thirds of internet users in the United States say it is “very important” that the content of their email should remain accessible only to those whom they authorize and that the names and identities of their email correspondents remain private (Exhibit 2).


About half of the consumer respondents said they are more likely to trust a company that asks only for information relevant to its products or that limits the amount of personal information requested. These markers apparently signal to consumers that a company is taking a thoughtful approach to data management.

Half of our consumer respondents are also more likely to trust companies that react quickly to hacks and breaches or actively disclose such incidents to the public. These practices have become increasingly important both for companies and consumers as the impact of breaches grows and more regulations govern the timeline for data-breach disclosures.

Other issues are of lesser importance in gaining the consumer’s trust, according to the survey: the level of regulation in a particular industry, whether a company has its headquarters in a country with a trustworthy government, or whether a company proactively shares cyber practices on websites or in advertisements (Exhibit 3).



Article has been taken from McKinsey&Co please see the original article below:

https://www.mckinsey.com/business-functions/risk/our-insights/the-consumer-data-opportunity-and-the-privacy-imperative?cid=other-eml-onp-mip-mck&hlkid=094031e489a242d6b283ccc2ca6ffa10&hctky=12462380&hdpid=a0959caf-80d4-48e3-8c1b-6635e28731fb

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