California recently passed Proposition 24, a landmark data privacy referendum that expands privacy protections in the world’s fifth-largest economy. Starting in 2023, the nation’s most comprehensive privacy regulations will protect nearly 40 million people and govern $3.2 trillion in economic output.
Prop 24 will ripple across America, which still lacks a national privacy law. Most companies will choose to extend these privacy protections to all users — rather than address the privacy patchwork with state-specific solutions. That solution is easier and more economical.
So what does this mean for those of us working in technology and connected devices? We have a whole new set of rules to learn. Prop 24 replaces the CCPA with the CPRA, which stands for the California Privacy Rights Act. Here are a few action items to guide you as you reorient around the latest data privacy regulations.
#1: Prepare for data privacy enforcement
The passage of Prop 24 creates the Privacy Protection Agency, America’s first government watchdog for privacy and data protection. The statewide agency will have a budget of at least $10 million annually, finally putting enforcement muscle behind privacy protections, something that the previous privacy law (the CCPA) lacked.
Businesses that leak data (either knowingly, by sharing without permission, or unknowingly via a data breach) will pay $2,500 per violation. The per-violation fine triples fines for violating the privacy of minors, which means that each violation can cost your business $7,500! You’ll want to be very careful if any of your connected devices capture or otherwise interact with data from those under 15.
Also, know this: the threat of fines is blood in the water for hackers. In Europe, bad actors are forcing businesses to pay up using ransomware and the threat of GDPR fines. These attacks will likely shift to the US now that there’s a privacy enforcer. Now is the time to shore up your cybersecurity defenses and prepare staff!
TL; DR: Voluntary compliance is over. Get ready for America’s first privacy enforcer. Make a plan to verify your data tracking, collection and storage methods so that you have clear documentation and strong internal controls.
#2: Evolve for the end of cookies
Cookies — the small files used to track users across the internet — are on their way out. Good riddance! Cookies were intended to improve the user experience by remembering details about users between sessions. Instead, they became invasive trackers that enabled a massive industry to invade privacy, often without permission.
It’s long past time to rebalance the dynamic. Consumers have a right to privacy and the industry must catch up. We need to prepare for our cookieless future and create solutions that offer insights and anonymity simultaneously. We can no longer expect to know everything about consumers in a permissionless environment; rather, the marketing industry must evolve with innovations that aggregate data in useful ways while preserving privacy.
Most people are ok with this type of anonymized aggregation, also called “differential privacy.” It’s a data collection framework that collects data in aggregate without ever revealing the identity of individuals. It can even be used to automatically ensure that data sharing across borders conforms to local privacy laws.
TL; DR: Future-proof your data discipline. Preserve anonymity, avoid collecting unnecessary personal information and use pattern matching to build segments that give aggregated, actionable insights without compromising individual identity.
#3: Put AI to work for data privacy management
Artificial intelligence is at work in other areas of your business — why not put it to work for privacy too?
AI can detangle the complexities of privacy management by rapidly sorting and segmenting user data to conform to privacy regulations while still offering the benefits of personalization to both consumers and companies. AI can also make sure that you are only storing necessary information and thus minimize your data collection footprint — and privacy compliance exposure.
By using its capabilities to process massive data sets, you can both increase precision and reduce human intervention when it comes to privacy compliance. These two factors — precision and human intervention — are going to be key when the sheer volume of data that will soon be governed by Proposition 24 will accelerate investment and innovation. Companies will need to maintain data privacy while still preserving the reach, quality and precision that their advertising-based business models depend on.
TL; DR: When implemented strategically, AI can help you sort, segment and store data in ways that both preserve privacy and comply with CPRA. Use it!
#4: Monitor your thresholds
The CPRA changes the compliance thresholds in two key ways. First, sharing is now the same as selling. If your business shares data with third parties for commercial purposes (without necessarily selling that data), you’ll be on the hook for compliance.
Second, the CPRA doesn’t apply to businesses that bought, sold or shared data from fewer than 100,000 customers/households annually. That’s up from 50,000 customers/households, which is a good thing for startups seeking traction. But, in the trenches of startup life, it can be easy to cross this threshold and not even realize it.
However, you’re still on the hook if your company made more than $25 million in gross revenue in the previous calendar year. And, if you use sister brands, these thresholds still apply if it’s clear to consumers that your sister brands share common ownership. So don’t think about circumventing these rules by making subsidiaries — unless they truly are standalone brands.
TL; DR: If you buy, sell or share data from more than 100,000 customers or households, you must comply with CPRA. Monitor this threshold closely.
#5: Innovate now to leap ahead later
In a nod to increased control, Prop 24 adds a new right to limit data sharing, which isn’t covered by California’s prior law, the CCPA. This is a step in the right direction. However, consumers want more than just the right to limit how companies collect, use and share their data. The onus shouldn’t be on the consumer to navigate these complexities; brands should implement user-centric privacy tools that empower consumers, not companies.
First and foremost, they want more transparency. In one survey, four out of five consumers will share more data if brands are transparent about how it’s used. They also want more control. In the National Privacy Survey, which my company did in anticipation of Prop 24’s passage, we found that not only did the majority of Americans want a national privacy law, but they also want new tools: 83% of Americans want the right to set an expiration date for their personal data.
These types of privacy innovations may be complex to deliver at scale, but it is the true benchmark for control. Data expiration controls empower consumers to determine the ideal privacy parameters for their unique needs, all on a case-by-case basis. That’s true transparency and control — and a way to earn customer loyalty.
TL; DR: Now’s the time to consider privacy innovations that help you not just comply but also leap ahead. Data portability, transparency and control, can earn you the trust (and loyalty) of your customers.
Future proof your business against a national privacy law
Absent a national law, California’s robust privacy regulations will likely shape the conversation around federal privacy regulations. It remains to be seen whether politicians will react by prioritizing a national law or if California will set the pace for everyone else.
One thing’s for certain: It’s a new dawn for data privacy in America. And it’s about time! Everyone deserves privacy — and our digitally-connected ecosystem must evolve to accommodate both privacy and profit. This isn’t an idealistic pipe dream; rather, it’s the most exciting business challenge of the coming decade.
I see the new privacy framework as an accelerant to a more responsible and user-centric approach across the digital ecosystem. Ultimately, our business models will strengthen, as will our bonds with customers. It’s a win-win; we just have to put in the work now to be ready for our inevitable privacy-first future.
Image Credit: fernando arcos; pexels
Fintech Kennek raises $12.5M seed round to digitize lending
London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.
According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.
The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:
“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”
The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:
“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”
The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.
The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.
Featured Image Credit: Photo from Kennek.io; Thank you!
Fortune 500’s race for generative AI breakthroughs
As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.
Goldman Sachs’ Cautious Approach to Implementing Generative AI
In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.
According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.
One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.
To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.
Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.
Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!
UK seizes web3 opportunity simplifying crypto regulations
As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.
Streamlining Cryptocurrency Regulations for Innovation
To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.
The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.
Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.
The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.
Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!