|Type of paper:||Literature review|
|Categories:||Data analysis Information technologies Banking Business ethics|
Data intelligence involves the analysis of multiple datasets in a way that it can be used by various companies in improving their services and make better decisions. For the past few years, big data has enabled the collection and use of large amounts of data that are derived from both machines and man. The characteristics of big data include volume, velocity, variety, variability, veracity, and complexity. It allows various industries to quickly capture, analyze and exploit information and can also compromise personal data privacy. For this reason, there is a need to develop regulatory framework and guidelines that will govern the use of big data in various industries with the main purpose to address the ethical issues and concerns about personal data.
Big data has always been an important driver of innovation that increases firms' competitive advantage in creating innovative data combination when shared across organizations and comply with strict data protection. The financial service industry is one of the industries that can greatly benefit from the use of big data intelligence. The most crucial use by the financial institutions that comes to the mind is the ability to reduce risks such as default risk, credit risks, and liquidity risks. The financial industry has lost big trust to the public since the global financial crisis in 2008 and therefore, it can utilize the use of big data intelligence to win back the trust of customers by enhancing customers' understanding, and satisfaction by studying their trends and developing the services and products that suit their needs.
This research, therefore, aims to review the literature that related to the development of regulatory guidelines that would help the financial industry to use big data intelligence while at the same time ensure the ethical issues about personal data are addressed.
The use of big data involves sharing of voluminous data that is collected through various forms be it social media, organizational websites or emails. The sharing of big data across various organizations might lead to sharing private information about individuals' life which as a result is a compromise of personal rights about private data. There have been raising concerns about the ethics of using big data intelligence that ends up utilizing private information about individuals. This research paper thus seeks to review and address literature about these concerns before ensuring the implementation of big data intelligence by the financial institutions.
Big Data Regulation Policies on Analytics and Use Phases
According to Broeders et al. (2017), the regulation of big data should shift from data collection to the analysis and use phases due to the application of analytics algorithm in the analysis phase. The algorithms used in analyzing data, the integrity as well as the quality of data used should be scrutinized. The methodology and algorithm used should be properly audited by the regulators and the public should be involved and informed of the methodology used in processing data as well as its accuracy. This should be achieved by assessing the public's awareness and concerns on data integrity.
It is however not easy to comply with the purpose and data limitations of the general data protection regulation that requires the collection and storage of data for a clear and precise purpose since big data analysis often involves the collection of data that is later analyzed by correlating with information from other sources (Broeders et al., 2017). For accuracy and integrity to be enhanced, the party that is responsible from the processing of big data should be held accountable for the accuracy of results that come from the analytics systems by supporting such results with verifiable evidence. The analytics projects of big data should be evaluated within the precise and ample time to allow for accuracy of the results. Broeders et al. (2017), posit that the projects should last for at least three to five years for the effective impact to be observed and to allow for early intervention in case of arising issues. An oversight body must also be established to ensure adherence to relevant policies. Broeders et al. (2017), suggest that profiling be used in making decisions since it will result in action that comes with consequences and should also involve real-world analysis when benchmarking. Human judgment and views and opinions of the expertise should always form part of decisions making and big data analytics should not be used to make automated decisions.
Legal Framework Related to Data and Privacy in Europe and Italy
The legal framework is a key aspect in addressing the ethical issues that are related to big data and privacy. According to Costanzo, D'Onofrio, and Friedl (2015), the European legal framework relating to data and privacy outlined that individuals' data must be processed lawfully, fairly, and only for specific and legitimate reasons. This directive was later extended to the electronic communication sector before a directive to the telecommunication service providers to retain data for purposes of investigation, detection, and prosecution relating to terrorism and serious crimes. Data protection was however not guaranteed and thus raising concerns about the security of private information and ethics related issues. In 2008, the protection of individual data that are processed for such criminal purposes was established since it was perceived that it was individual's right to have their data protected and to have right to a private and family life (Costanzo, D'Onofrio, & Friedl, 2015). In 2016, general data protection regulation made the non-Europeans companies that offered goods and services to offer to the consumer the transparency, easy access and efficient control of their data.
According to Costanzo, D'Onofrio, and Friedl (2015), in 1996, the authority for personal data protection in Italy was established. The authority was established purposely to protect the rights, fundamental liberties, and enhance respect for personal dignity when processing individual data. The data protection rights resulted to control over individual's data and information as well as their use. On the other hand, Secrecy rights introduced the right not to involve other parties from knowing about personal and family-related information. The framework categorized data into sensitive, judiciary, semi-sensitive and traffic data. The establishment of the Centre for Elaboration of Data was purposefully to collect, elaborates, classify and store data and information in automated files for national security and crime fighting.
These frameworks can also be applied to address the ethical issues about private data security to ensure proper use of big data intelligence by the financial institutions without compromising an individual's private life.
The Impact of Using Big Data by Organizations on Privacy and Consumer Welfare
Making data accessible to various entities is one way of ensuring an organization benefits from big data. An organization is however still responsible for any misuse of data by third parties and other stakeholders (Kshetri, 2014). It is thus essential to have detailed information about every person that has access to the data. The stakeholders often have different priorities in risk management concerned with big data. The organizations' priorities are always to avoid reputation damage, fines, and lawsuits while information technology mostly focuses on cybersecurity and third-party management (Kshetri, 2014).
Consumers who are not enlightened are not aware of the use of information sharing features such as location and other security features that are available on their devices. Most of the consumers are not aware of the importance or use of their personal data by various organizations. It is therefore advisable that the manufactures incorporate privacy and security features that are transparent and are easily understood by all users. The less sophisticated users should be enlightened on how the businesses use their information and should be made aware of their privacy rights and ensure they exercise it. The users are not able to respond to the deceptive information by the marketers during the data collection period and thus making them vulnerable to sharing their private information. They cannot face the government and businesses to address their concerns. Therefore, the regulatory framework should take into consideration such issues and ensure the users are enlightened about data privacy.
Privacy policies, codes of conduct and ethical standards are not well established and thus putting the big data industry in a regulatory grey area. This allows businesses to develop tactics that are sophisticated for consumers and also exploit practices that only focus on profits as long as the practices are not discriminative (Polonetsky & Tene 2013).
The business may also use customer's information for purposes that are not ethical and thus breaching their rights. The regulatory guideline should take into consideration such factors and ensure that businesses only develop strategies that are understandable to the consumers and that they only use consumers' information for purposes that are ethical. The consumers should become more sophisticated about the misuse of their data and facilitate legal and regulatory developments about consumer data protection. They should file complaints with the regulatory bodies and engage in the lawsuit so that businesses become responsible and ethical when handling big data.
Ethics and Big Data
The Kantian aspect of ethics is concerned with what people should do based on the reflection of rules that everyone ought to follow and do things the right way (Herschel & Miori, 2017). It, therefore, relates to data ethics in the sense that people should consider following rules that allow individual's information to be shared with or without their permission. Some information can, however, influence the behavior of a person due to self-interest and thus making people not to be on the same term when they use big data. This can raise ethical concerns and limit individuals from sharing their data with the organizations.
Utilitarianism is an aspect of ethics that examines the right and wrong on the basis of the consequences of an act or a rule (Herschel & Miori, 2017). The right act enhances happiness while the wrong act is deemed to reduce total happiness. When assessing the ethics of big data, actions should be assessed by weighing the positive or negative impact that the use of big data will cause. There is however biasness and vagueness in identifying whether the impact is positive or negative. The society thus needs to be informed about big data and its impact on their lives so that they can differentiate in instances of vagueness and biasness.
The social contract theory of ethics suggests that the moral obligations of a person depend on the agreement that people have made to form the society where they live (Richards & King, 2014). In relation to big data usage, people who use big data technology should be able to control how it affects them by collectively creating rational rules based on moral rights. On the other hand, Virtue ethics assess actions based on how virtues or moral characters would act (Davis, 2012). People who use big data should be assessed to examine whether their intentions are consistent with the actions of virtuous persons. If an individual ignores the right of others by his or her action then he or she is deemed dishonest and greedy which is a reflection of deficiency of moral character.
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