Innovation vs Privacy:

The Open Data Economy Dilemma

An exploration of the cross-border

data economy and the race to win.

Whitepaper | March 2019

 Open data—public information and shared data from private
sources—can unlock $3 trillion a year in value across seven key
sectors of the global economy.

SETTING THE SCENE

Japanese Prime Minister Shinzo Abe has declared Importantly, our definition of the data economy
that the next G-20 summit should focus on data does not cover the core elements of the existing
governance and creating global standards, arguing “Big Data” industry, including cloud infrastructure,
that the engine for economic growth was “fuelled enterprise data warehouses, internal analytical
no longer by gasoline, but more and more by platforms and applications. These are all
digital data.” examples of important prerequisite
 infrastructure which enables the data economy.
The open data economy - meaning public
information and data shared from private sources - There is no doubt that the data economy
is already estimated to generate $3 trillion in represents a significant global economic and
economic value per annum globally (McKinsey, socio-political opportunity, however, it is unclear
2013). Global infrastructure for responsible, ethical how well this opportunity can be leveraged by
data liquidity is still required to unlock the next local and regional economies while the global
wave of cross-border, data-driven growth. infrastructure requirement for dynamic consumer
consent management and safe data liquidity
This infrastructure, a framework to give citizens, remains unsolved.
companies and government the trust and
confidence to overcome data being trapped
This report provides an insight into the current
behind organisational walls, is fast-emerging as a
data economy landscape in front-running
key strategy requirement in government policy,
markets around the world, and the extent to
private-sector trade and investment strategies.
which they are harnessing the potential of the
data economy. It highlights the significant
We define the open data economy as the trade in
opportunities and challenges, and lays out how to
data between organisations and/or governments,
maximise the scale of this once-in-a-generation
domestically or internationally, and the derivative
industry transformation to facilitate safe, ethical
data products (algorithms, insights, applications)
cross-border flow of data and insight.
that arise from that previously unavailable flow of
data. This economy is comprised of organisations
and governments that are able to provide
personalisation of services through data and
insights solutions to old (and new) problems.

Whitepaper | March 2019 2

 Part 1: The international context
and geo-political implications

Data Republic’s experience across APAC and the The core challenge most leaders face when
USA supports a deeply held belief that data will be entering the data economy is the perceived need
the single biggest lever for micro-economic and to conduct a trade-off between innovation and
social reform in the next decade. privacy. That trade-off used to be unconscious.
However, in the wake of data and cyber scandals -
We forecast that it will be the markets who from Facebook to True Corp and SingHealth - it is
establish themselves as ‘leading light’ progressive becoming an increasingly conscious decision. In
data policy-makers who will benefit the most from the absence of an accepted framework and modus
the open data opportunity. operandi, the perceived potential risks and
uncertainties outweigh the positive economic
These markets will be best positioned to export impact or public good. Fear outweighs benefit.
their open data governance model and
infrastructure, capturing a disproportionate share If one imagines privacy and innovation as two ends
of global data flows. As well as owning higher value of a seesaw, markets are determining where the
activities along the data value chain (e.g. job optimal balance point is for both. Through this lens,
creation in the increasingly lucrative fields of we can consider the current positioning of each
analytics, data engineering, data scientist and market, key considerations and likely
cryptography). consequences.

The Perceived Trade-off: Privacy vs. Innovation

case studies?

Security Data sharing

Identity Collaboration
Governance Open innovation
Consent Liquidity
Transparency Value

Data will be the biggest lever for microeconomic and social reform.
By this we mean:
Scaled personalisation at an industry level
Digital identify for banking and basic services, replacing paper systems
Retail locations and precinct design driven by consumer and community needs
Cross-border trade in data (e.g. KYC, global credit scoring, transnational travel and leisure experiences)
Real time economic activity indicators, rather than historical, static data sets
Dynamic government services provisioning, planning and policy development
These are not wild ideas; examples already exist.

Whitepaper | March 2019 3

 At a global level, different approaches are SINGAPORE
being taken: Model of balancing privacy, national
and business interests
Personal Data Protection Act 2014 with
China is showing us what it possible with data
rights for compensation
innovation where there, historically, has been
very little personal privacy.
MALAYSIA
Europe is a case study with well-intentioned but Enforcing the Personal Data Protection
blunt policy instruments creating heavy Act 2010 (PDPA) through Personal Data
compliance burdens and complicated user Protection Department
experiences.

CHINA
The USA is a laggard, reeling from Data as enabler for the social credit
headquartering technology companies system and risk for security
accustomed to operating in a local context of Cybersecurity and personal data
limited privacy protections. framework in development

Australian financial services companies are

contending with conflicting but positive USA
regulatory headwinds of open banking utility Track record of ungoverned data
alongside more stringent personal data sharing innovation (e.g. APIs, data
protections. aggregator businesses)
Increasing privacy regulation being
Singapore is seeking to extend its reputation as a tabled and implemented
safe haven from financial services into data,
fuelling the ambition to become an AI-driven
smart nation. UK
General Data Protection Regulation
Experience in exporting open banking 
Taken collectively, a clear pattern of competing Wait and see post-Brexit
headwinds is emerging. Open data is being used as
a lever for increasing consumer choice, control and
transparency. At the same time, enforceable AUSTRALIA
obligations for organisations to protect and secure Counter-balancing consumer choice
data and preserve privacy. This creates a complex (open banking) with stronger data and
challenge for all executives responsible for privacy protections
navigating (seemingly) opposing forces.

We see the dual forces as a positive development THAILAND

that supports our thesis: open data requires good First Personal Data Protection Act
governance. expected to come into effect 2019

INDONESIA
Policies in development
Industry and electronic-format specific
obligations to keep personal data in
Indonesia

Whitepaper | March 2019 4

 Recent news from the great 'data economy' race...

The smart nation: Singapore's masterplan

The Info-communications Media Development Authority (IMDA) has
launched a series of initiatives to support the infocomm media (ICM)
sector. The aim is to capture opportunities in the future of services
ecosystem, as part of its Framework for Action to develop Singapore’s
digital economy.
Read full article

Japan calls for global consensus on Data Governance

With vast amounts of data being created every day, Japanese Prime Minister
Shinzo Abe has declared that the next G-20 summit should wrestle with
how to manage that digital information. In doing so, he argued that the
engine for economic growth was “fueled no longer by gasoline, but more
and more by digital data.”
Read full article

US Falls behind in fintech revolution as

regulators squabble
US officials are fighting over who should have jurisdiction to regulate
financial technology firms, while Europe and Asia are driving ahead with
the formulation of detailed technical standards for open banking apps.

Read full article

Leading UK FinTech companies announced for trade

mission to USA
"The UK has long been a top global destination for investment in financial
services, and with its unique access to top talent, stimulus for start-ups and
favourable regulatory environment, UK fintech will remain on the frontline
of innovation."
Read full article

Whitepaper | March 2019 5

 Part 2: What winners will do in the
open data economy

Our country comparison finds that governance Interestingly, these potential ‘leading light’
development for external, cross organisational data markets are all net data importer countries,
sharing is not consistent globally. While models meaning they have a small(er) customer base
such as what is happening in China are exciting, we and lower raw data production potential. Stable
do not believe it will be scaled and replicated governments, coordinated policy approaches
across markets. More likely, countries that pioneer and  highly skilled workforces with a need for
balanced and coordinated policies proven to access to data will likely apply their hunger for
protect citizens while stimulating economic sourcing data to drive economic activity.
growth will become what we refer to as ‘leading
light’ markets. The likely policy orientation of these markets is
pro-liberalised trade regimes, leveraging legal
On a policy-level, fragmentation is emerging instruments, emerging technologies and
regarding  requirements for privacy and cross- cryptographic techniques to allow data, insight
border data flows, in turn making international or algorithms to cross-borders, while protecting
interoperability a growing challenge. Leading privacy and commercial interests from escaping
markets will need to use their track record as a into other jurisdictions.
credential to influence other nation states to adopt
their data framework, and lead the creation of In our experience, this is definitely possible,
cross-border, interoperable data infrastructure. however regulatory and legal standards need to
catch up. Scaling data governance frameworks
and trans-national standards will then, most
To be a ‘leading light’ open data market, we likely, occur along known trust lines; where
believe the pre-conditions are: diplomatic, economic and political ties are
case studies?
strongest.
(1) Co-coordinated, whole of government policy
making that is pro-innovation and has strong By creating and then expanding data trade rails,
public-private sector engagement domestic entrepreneurs and businesses will have
a competitive advantage for operating at a
(2) Market structure of concentrated private global scale.
sector power and highly digitised

(3) Strong privacy, IP, cyber policy and

protections framework

(4) Consumers with a positive, pro-data

mindset and high levels of trust in institutions

(5) Ambition to lead the world (not stopping at

national level)

Using this framework, our assessment is that

Singapore, Australia, New Zealand, Japan,
Canada and the UK are at the forefront.

Whitepaper | March 2019 6

 CASE STUDY:
Westpac accelerates data sharing with Data Republic

Challenge In 12 months of deploying Data Republic's

Senate Platform...
Westpac, a major Australian bank, identified that they were
missing out on opportunities to drive growth through data 12+ new data partnerships created
collaborations. The problem was that data sharing was too 300+ analytics workspace environments
legally complicated, risky and time consuming. Concerns containing bank data provisioned for
around how data would be used, stored, shared and analysis
destroyed resulted in uncertainty and inaction. The bank 8 new startups launched via Fueld
needed a way to give authorised parties access to data accelerator to solve bank problems with
without releasing it and have confidence any data shared data
was used for intended purposes only.

Beyond the scalable management of risk, legal terms,

privacy and information security as it relates to data sharing,
there were also the technical challenges associated with
provisioning data to parties beyond the bank’s environment. The data that Westpac has is important
The bank needed to ensure that they could retain visibility, to many of our customers to help them
control and revoke access to datasets. And, they needed a make better decisions and we want to
solution that wouldn’t further burden or drive up costs for support that. The privacy and security
internal IT team. of that data for our customers is equally
important. Good governance and
Solution technology are the keys to helping us
achieve this balance.
Westpac partnered with Data Republic to deploy the
Senate platform to govern data collaboration and Gary Thursby
commercialisation activities with external parties.
Group Executive, Strategy and
Enterprise Services at Westpac
Deployment of Senate has transformed the way Westpac
collaborates with data; accelerating outcomes for internal
analytics projects, generating scalable revenue from data
assets, and supporting innovation through new Beyond the financial sector:
partnerships, while ensuring that customer privacy is 300+ analytics workspace environments
protected at all times. containing bank data provisioned for
analysis
No Westpac customer personal information (PII) is ever seen
by Data Republic users: only anonymized and aggregated 15 data products have been developed and
data is uploaded or exchanged via the Senate Platform. launched via 12+ new partnerships forged
on the Senate platform.
In addition, risk management capabilities are stronger.
Senate provides a data sharing control centre with an 4 Government insight projects using
approved process for requesting data, and a comprehensive licensed bank transaction data for
audit trail for all data licensing. The simplified legal modelling and policy.
framework boosted productivity, with new requests being
processed in days, not months. This has resulted in a 6+ data-for-good meetups and 2 university
reduction of man hours and increase in new data driven datathons have used licensed bank data.
value creation being explored.

Whitepaper | March 2019 7

 Part 3: Real-world applications & challenges

One of the biggest challenges for policy-makers and c-

suite executives is coordination. What would happen if
companies and governments address these challenges
in a piece-meal or internally-focused fashion? An
example of the friction created is a real life example of a
collaboration between a travel and a financial services
company. They agreed to complete a data collaboration
project. The goal and intent was clear. However, both
had internal pre-approvals for different cryptographic
solutions.

One used a method that the other believed was too

vulnerable to dictionary attacks. Ironically, this stalled
their ability to proceed. The reason: neither wanted to "For the open data
go through the pain of having to get fresh internal
approvals for a different approach, regardless of the pros economy to be
or cons. The example highlights a key point discussed in
this paper: for the open data economy to be realised, realised, private and
private and public sector must work together to agree
flexible standards, principles and frameworks to
public sector must
become the ‘trade rails’ for governed data work together to
collaborations.
agree flexible
For data collaborations involving customer or personal
information, multiple concerns need to be managed. standards, principles
The key considerations are: and frameworks to
(1) Identification – the loss of personal information (PI). become the ‘trade
Specifically hacks or leaks.
rails’ for governed
(2) Re-identification – the potential to re-identify an data collaborations."
individual through attribute information.

(3) Consent – acting in accord with the ability for the

data to be collected, stored and used.

(4) Loss of control – the organisation responsible for the

collection and usage no longer being able to fulfil this
duty.

Risks can be mitigated in multiple ways. At a company

level, this is quite easy to see (although still notoriously
difficult to execute). The problem is that if each
organisation solves the risks in a unique way – looking
internally only – data liquidity is limited to inside the
specific entity. Solving data challenges at a company
level does not create liquidity for broader economic
development.

Whitepaper | March 2019 8

 Alongside principle-based strategies and co-ordinated policies, there is a need for
guidance so that analysts and data scientists can practically deliver valuable work
in privacy-compliant ways.

Decision-making frameworks and accreditation processes assist the private sector to have certainty
on what is considered acceptable. Practical suggestions will speed up private sector adoption of
data innovation. For example, to manage risks associated with Personal iInformation, a decision
making framework could include:

(1) Do you know the scope, objectives and (4) For granular data access, what controls
use case(s)? are in place to manage and mitigate
The more well defined, the easier is it to take Personal Information, re-identification and
appropriate action and define controls to apply.. commercial risks? What is acceptable?

Legal: the final backstop if things go wrong and

the framework to spell out what is acceptable
(2) Is the intended use case within the scope
of the consent policy? Cryptographic: techniques to obscure data and
convert it from data to information or, even
better, ‘junk’. Examples include encryption,
If yes, proceed. If it is unclear, you need an
salting and hashing. These all have various
organisational position on your approach to
strengths and weaknesses.
matters such as ‘implied’ vs ‘implicit’ consent. For
example, if your data collection policy states
markets where the data can be processed, you Licensing: a process to allow for access to data
need to decide if this is black and white, or for specific purposes. The common approaches
whether countries with similar (or stronger) include  here are permission-based and policy-
regulatory and legal regimes are inherently based. An emerging new method supported
included. You need to comply with your policy and by Data Republic emerging is license-based,
your partner or partner(s) policies. meaning flexible to the specifics of the use
case rather than a blanket rule applied.

People: limits around who have access, what

(3) Does the analyst / data scientist / business they can access and how
process need granular data?
Audit: is there traceability in who has done
If the answer is yes, we need a model for putting what? This drives greater responsibility
controls around the data access and application,
and not just in the data. InfoSec: secure, compliance IT, cloud and
security policies, practices and processes that
If the answer is no (e.g. the intent is to train an reflect global best practice
algorithm on a large dataset), move the algorithm
to the data or cryptographic techniques such as
homomorphic encryption will be well suited.

Whitepaper | March 2019 9

 Part 4: Summary of Findings

KEY FINDINGS

1. Good governance equals unlocking the value of the data economy. Rather than a trade-off, data
governance and innovation should be treated as balancing objectives.

2. The greatest winners in the open data economy will be the ‘leading light’ markets and their allies. It
is not clear which market will lead. Singapore, Australia, UK, Canada and Japan are well positioned.

3. A framework of legal, regulatory and technology instruments is needed. This is the bedrock of
common, scalable infrastructure.

4. Executives and policy-makers across foreign policy, trade, cyber, investment, and industry verticals
need to work together to define their strategy and principles.

As markets around the world race to become the ‘leading light’ of the cross-border data economy, it
is clear that the winners will be those who design a scalable, balanced governance framework with
inter-operable consent management and flexible but accepted technology framework.

It is also clear that the winners won't be acting alone. Government must and should play an active
role in shaping the economy through proactive industry engagement, cross-border agreements and
progressive policy and investment decisions. Companies and organisations who look to work
together will best placed to harness the opportunities.

With the above in mind, it's worthwhile reflecting on how prepared your organisation and
government is to seize this once-in-a-generation open data opportunity.

Are you prepared for the next generation of an open data economy?

ABOUT THE AUTHORS

Danny Gilligan, Lynn Thompson,

CoFounder Data Republic, General Manager, Data Republic Singapore

As both a serial entrepreneur and venture capitalist, Lynn manages Data Republic’s operations and growth in
Danny Gilligan is at the forefront of driving disruptive Singapore and throughout South East Asia, working with
innovation in Australia’s financial services sector. Danny enterprise and governments to realise opportunities in the
is co-founder of both Data Republic and Reinventure emerging data economy. An experienced technology and
Group, as well as a founding director of Stone & Chalk, innovation executive, Lynn previously worked with
an independent not-for-profit Fintech hub in Australia. Deloitte Digital and Firemark’s InsurTech Hub, responsible
Danny regularly consults with government, technology for launching and operating the emerging technology
and business leaders on data innovation policy. and artificial intelligence (‘AI’) hub.

Whitepaper | March 2019 10

 For more information about Data Republic visit
www.datarepublic.com

datarepublic.com