Data as Currency: What Value Are You Getting for It?

In traditional currency transactions people exchange cash for goods and services of equal value. But in the data-as-currency world, trade is one-sided, at least today. Generators of data get practically nothing. Their data is captured and used to sell them more things in a targeted manner. There are also concerns around security and privacy. “There are huge opportunities [to use data] for much better engagement and service, but it’s being used just to target and sell to you,”says Jane Barratt, chief advocacy officer for MX Technologies, a Utah-based firm that provides data to financial institutions and fintech firms.

In a conversation with the Knowledge@Wharton radio show on SiriusXM, Barratt talks about the implications of data as currency, why data-driven innovation is a strategic imperative for companies, and related issues. (Listen to the podcast at the top of this page.)

An edited transcript of the conversation follows.

What do you mean when you talk about data as currency?

Jane Barratt: Something we hear that data is the “new oil,” and that there is absolute value in data. If you go back just 10 years and look at the market caps of the top 10 companies globally, those companies made products and services. Today 50% of the top 10 companies are data-based platforms — Google, Facebook, Alibaba, Tencent — it is a fundamental shift in terms of the way the market views the value of data.

In traditional currency transactions people exchange cash for goods and services of equal value. But when you talk about data being currency, do you think the trade is on equal terms or is it one-sided?

Barratt: It is still very early days in this data-as-currency world, but it is an absolutely one-sided trade. The buyers at this point are amassing, assessing, consolidating data, and then using it. They are the ones that can put data to work in the economic model. The generators of data are basically getting nothing. Think about a social media platform that says, “Our user is worth $120 to us in the course of a year.” To you, it seems like a decent trade. You think, “Okay, they give me photos, help me keep in touch with family,” and so on. Then you realize that this amount is aggregated across the world. If you’re looking at a New York City-based person who is earning half a million dollars a year, of course they’re worth more from an advertising model and a monetization model than someone in a village in an emerging market.

At the “Fearless in FinTech” conference at Wharton San Francisco, you presented a paper in which you used the phrase “data exhaust.” What is that? And why should consumers care about it?

Barratt: Data exhaust is not that different from actual environmental exhaust generated by cars. If you think of everything you do in the online world, every site you visit, everything you click on — you’re being tracked. That is being captured in a database somewhere and made up into this sovereign view of who you are. This is now also happening in the offline world, through tracking through your phone, for example, and location tracking. There is this massive amount of data that you are generating on a daily basis, that is being captured and sold and resold, and then targeted right back at you to sell you more things.

That’s the expectation that a lot of people have now. It has almost become the norm rather than the exception.

Barratt: It is absolutely the norm. You know that you’re throwing off data everywhere you go.