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Lessons Learned from Other Industries

While the auto industry is embracing big data and its opportunities for new services and deep insights, auto companies are wary of security risks that could spark a costly backlash. Automakers can learn a lot from other industries — such as financial services, utilities and health care — that have long been traveling this road.

As California’s three investor-owned utilities — Pacific Gas And Electric, Southern California Edison and San Diego Gas & Electric — introduced smart meters to their grid a decade ago, they worked with the state’s Public Utilities Commission to develop rules to protect customers’ privacy and security.

Their approach set the bar for best practices surrounding customer data, given that there is no U.S. law that covers data privacy the way the General Data Protection Regulation does in the European Union, said Neil Strother, principal research analyst at Navigant.

Automakers would be smart to follow the guidelines in the California rules, such as data minimization, transparency and some customer access and control of their own data, he said.

“It’s not that the laws don’t matter, but I really think it comes down to the companies,” Strother said. “It’s a balance of trust. Customers trust Amazon or Google or Ford with their data, and from a Western, legal perspective, if the companies screw it up, the courts are open.”

Drivers want to feel that their connected cars are guarding their privacy, just like they protect passengers’ bodies. The amount of information that companies can get about their customers, especially with machine learning, is very powerful and must be handled carefully, Strother said.

“The onus is on companies to get this right,” he said. “Consumers, in general, want the benefits of connected technologies as long as their privacy and security are not abused. It’s a daily battle, if not hourly.”

Automakers could also look to the health care industry as a leader in determining who owns the data collected from a connected car, said Gaurav Tripathi, chief technology officer of Innoplexus, an artificial intelligence solutions provider.

“Data ownership needs to be with the party who owns the car, or else it will lead to a short-term boom in data sharing that eventually ends in a mess of litigation,” he said. “Health care is the perfect example. Nobody now doubts that a patient owns the data.”

Spending money on smart systems upfront makes sense, because the potential dollar value of all of this data is immense.

Once more insurance companies, transportation providers and customer services get involved, Tripathi said a lot of value is going to be unlocked.

“The examples are clear from [financial technology],” he said. “Earlier, only banks were supposed to be the custodians of everything related to money. Now just look at the size of business that fintechs have built all around the world by unlocking the value in data. The same is happening in health care, although much more slowly than in fintech.”

Originally published on Automotive News.

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