The curtain falls on the notion of privacy
The net curtain. After decades of keeping prying eyes out of suburban living rooms, the simple net curtain can tell us a thing or two about privacy. Cast your mind back to the start of this century:
Terrorist attacks on the World Trade Center lead to the birth of the Patriot Act.
Myspace launches, becomes one of the most popular social media sites ever, and paves the way for Facebook et al..
Sales of net curtains go into decline, dropping 4% in the next 3 years.
What is the Internet of Things?
Coincidence? Perhaps. But the birth of internet based social networks and the rise of governmental anti-terrorism activity post 9/11 have helped to create a climate where data collection is well-funded, commercialised, and commonly accepted.2
In an era where big data is using algorithms to piece together nuggets of data to reveal an individual’s identity, are concepts of privacy and consent outdated?3
Are digital systems eroding the simple notion that there can be anonymity in a crowd?4
Every day, hundreds of pieces of information about you are recorded and stored on a networked device. Data about your health, your activity, your buying preferences, finances and more, are all available to interested parties who care to look for them.
In some instances, you were unaware that the data was being collected, but in most instances, you freely offered up the information in return for discounts, rewards or social inclusion. This tradeoff between security, convenience and privacy is changing traditional perceptions of what privacy means.5
For many, these changes are unsettling and carry inherent risk, but for those too young to remember the heyday of the net curtain, private life may already be an illusion. They’ve grown up in a world where they are surveilled, their employer owns their emails and the government listens to their phone calls… and yet their desire to connect and maintain relationships online mean they’re happy to make this compromise.
What will the future look like if, as some predict, social conformity continues to be a regressive force on privacy? What sacrifices will we need to make, what concessions, and what opportunities will be created for those willing to capitalize on this new world of abundant data?
What lies behind the curtain? The answer remains as intriguing as ever.
Where public ends and private begins
The evolution of privacy is inseparably combined with the type and quantity of data we’re divulging to the online community. So, let’s start with some basic numbers to put things in context:
That means nearly half of the world’s population sharing information about themselves online: Today, Facebook alone has around 2 billion users6, a number that is likely to be dwarfed in a future where even greater numbers of the world’s population will have internet access.7
And we like to share.8
Adult internet users claim to have posted the following online.
Among younger users who have grown up free of the traditional ideas of privacy, these numbers are likely to be much higher.
Now, add to this picture the increasing presence of Artificial Intelligence in our homes, our cars and our wearable technology. The ‘Internet of Things’ is creating a future where the lines between our on and offline lives are blurred beyond any meaningful recognition.
As Homero Gil de Zuniga, Director of Digital Media Research at the University of Texas-Austin stated;
“By 2025, many of the issues, behaviors and information we consider to be private today will not be so. Information will be even more pervasive, even more liquid and portable. The digital private sphere and the digital public sphere will most likely, completely overlap”.9
While some people will predictably rebel against this development, evidence suggests that our perception of privacy will shift and a new balance between public security and private information will be found.10
Faced with the prospect of turning our backs on the social inclusion and conveniences of modern life that our online lives afford, or re-evaluating our privacy standards, most will choose the latter.11 Indeed, most already do.
accept that disclosure of personal information is a
‘fact of modern life’.
aged 25 – 34 view their personal information as a
commodity to be traded.12
A report by the PEW Research Centre found that people are happy to accept surprising incursions into their privacy in return for relatively minor benefits:
- 54% would accept CCTV with facial recognition in their workplace if it helped to catch a petty thief
- 52% would be happy for their health information to be recorded on a third-party website if it helped the booking process for visits to their doctor
- 47% would allow their supermarket to SELL data on their shopping habits and preferences in return for discounts13
It is hard to imagine a scenario whereby this trend could be reversed, or even slowed. A series of well publicised stories relating to the way our personal information is collected, used, and secured, have done little to dissuade people from continuing to publish and share their personal information:
- Snowden – 1.7m documents14
- Equifax – 143m records15
- Spambot – 700m records16
It seems that a willingness to divulge personal information is simply now just a fact of life17, that we prefer convenience to confidentiality, security to secrecy.
"The choice for mankind lies between freedom and happiness, and for the great bulk of mankind, happiness is better."
The evolving face of privacy and our relationship with it has the potential to completely revolutionize business. The risks are real but so too are the opportunities. Businesses operating in this new era will succeed, or fail, on two key pillars:
- Their ability to build trust with clients through robust data protection processes
- The commitment to upskilling staff to enable them to identify opportunities in the abundance of data they’ll have access to
Preventing and responding to identity crime in Australia in 2016 cost $2.6 billion. Around 5% of Australians experience financial loss as a result of one of these crimes, while nearly 10% experienced misuse with relation to their personal data.18
Due to their prevalence for sharing personal data online, the number one target for these types of crime are people aged 18-24.19 This social media generation, including some 2 billion or so using Facebook, may be largely oblivious to why their favorite social media platforms are free. But this is changing as people become more aware of the realities of how their personal data is being shared, collected and commoditized.
As these figures continue to grow annually, and the primary targets mature to business owning age, the issue of data protection will become increasingly prominent.
There is no international consensus among internet providers on how to best balance personal privacy and security with the convenience of popular content and services. Until there is, risks, hacks and opportunities for theft are going to continue to exist.
This places a great emphasis on accountants, bookkeepers, and other professional services who represent the visible guardians of personal data, to take the issue seriously and position themselves as experts in the protection of their clients’ data.
New business will increasingly base their decision on professional service providers on their ability to demonstrate:
- Regular Security and data assessments – periodic reviews of data usage and storage strategies.
- Technical security – Implementation of technical protection measures like a business grade firewall, anti-malware, anti-virus and email filtering software, 2 Factor Authentication, data encryption, back up and a disaster recovery plan.
- Physical security – Employee key cards, visitor logs, controlled access to data.
- Admin security – Access to data that aligns with an individual’s role.
- Employee training and education – To ensure that employees understand how data is protected, why and what their roles and responsibilities are in that protection21.
Those unable to sufficiently demonstrate an end to end security and privacy approach to client data, and their own, may well find themselves falling victim to both attack and market forces.
But the subject of data security and its subsequent privacy concerns, is not without its opportunities.
In a world where the range of ways to collect data about us becomes ubiquitous, living a private life as we currently understand it may be beyond the reach of most people.22
That is not to say it won’t exist, but the notion of privacy itself may become commoditized.
Improvements to encryption technology are likely to result in the creation of boutique services for people willing to pay a premium for greater control over their data. Services that the accounting profession will be well placed to provide. Privacy services may become a luxury service, one with which the wealthy can navigate the new normal of public life and mass surveillance.
Big data is getting bigger – and so are the opportunities
Google processes more than 24 petabytes a day – a thousand times the data contained within the US Library of Congress.
Each month there are 32 billion searches on Twitter and 1 billion unique visitors to YouTube. By 2020 there will be 5,200 gigabytes of data available for every man, woman and child on the planet.
Key to the continued growth of data volume over the next 10 years is the ‘internet of things’, connecting objects to the internet and allowing information to pass between them. By 2020 30 billion devices will connect wirelessly to the internet transferring information about every aspect of our lives.23
But is all this data good for us?
At its heart, big data works by creating connections between previously unrelated pieces of data in order to bring to light the previously unseen. A great, if somewhat extreme example is the Canadian Credit Card issuer who discovered that people who used their card in a particular pool hall had a 47% chance of missing 4 or more repayments in the subsequent 12 months. Whereas, people who purchased anti-scuff pads for the legs of their furniture almost never missed a payment.24
This obviously raises substantial privacy concerns about how our personal data can or should be used. The US government even issued a statement warning against this type of use for data analytics:
“data analytics have the potential to eclipse longstanding civil rights protections in how personal information is used in housing, credit, employment, health, education, and the marketplace. Americans’ relationship with data should expand, not diminish, their opportunities and potential.”25
The reality however is that big data equals big business. Now we have embarked on the road of sacrificing our privacy, it is unlikely that attempts to develop public policy to ensure security and privacy online will resist the counter efforts of those special interest groups who stand to benefit from its use.26
So assuming big data is only set to get bigger and ride over our personal privacy, how will it likely effect the accounting industry?
The number one fear most people have is for the future of their jobs.
Big data, and hence big analytics, has already automated some basic and entry level tasks, and there is every reason to believe it will continue to automate more and more complex ones.
Indeed, firms looking to cut costs will naturally leverage big data to target easy to automate tasks commonly performed by entry level employees.
This represents a big change to the way firms will do business and some jobs and tasks will be made obsolete through its implementation. But whether big data represents a threat or an opportunity to the accounting profession is up to accountants and their willingness to upskill.
There is an opportunity for accountants to take a more strategic role and help shape the future of the industry. Those willing to upskill will move up the value chain and turn big data to their advantage. Business intelligence and data mining tools will improve efficiency, help to spot new opportunities, provide customers with better products and services, and predict future patterns of behaviour.
However, without the right tools, experience and knowledge to interpret the data, its abundance is irrelevant and it is relegated to lines on a spreadsheet. Understanding the data and drawing insights from it is going to be key to future success in the industry. Accountants have the advantage of understanding business, and they are already accustomed to working with structured datasets and performing data analysis. They must learn to take a lead role in the decision-making process27
The problem for accountants is that the future belongs to unstructured data — the kind that can be dug out of tweets, videos, photographs and the vast amounts of text floating free on the Internet. Properly trained to structure, gather and analyse financial information, accountants and finance professionals can apply their core skills to non-financial and other datasets – and, crucially, help make big data smaller and more structured.28
The increase in the value they bring to organisations could, therefore, be dramatic. There could, in the next 5 to 10 years, be a qualitative change that sees the finance department develop from a service function to a business-critical service, central to strategic decision making.
The next stage in evolution
We are sharing more of ourselves online today than we would to most people’s faces. Convenience and security have seen us too far along the road of sacrificing our privacy to ever return to any traditional notion of privacy we once had.
The next generation are likely to have no concept of what privacy meant to those generations that preceded them. What we regard as private today is unlikely to have much bearing in the future. A new balance will need to be found between public security and private information.
Our evolving digital economy will necessitate a focus on trust, privacy, transparency and security in the relationships between accountants and their clients.
While it is to be expected that some people will rebel against the idea of sharing more of themselves online, it may prove impossible to live outside of the grid without the means to pay for it. New boutique companies offering privacy as a commodity will appear. Businesses who control who has access to data and offer the opportunity to escape our new reality, for a price.
The impact of big data on automation and the future of jobs is real. Increasingly complex tasks will become automated and accountants will need to adapt in order to maximise their skill set in a meaningful and valuable way.
That does not mean accountants will become obsolete though. Far from it. Automation will provide the time to focus on more valuable services to their clients. Using their business insights, their experience, and their emotional connection to the wants and needs of their clients, accountants will be perfectly placed to make sense of the masses of data and turn it into strategically valuable insights.
In a future lacking in privacy, accountants may be the only people that business owners can trust.