The last thing that the department for business, energy and industrial strategy (BEIS) needs now is another problem it can’t solve. So, boy are they glad that the apparently inevitable pandemic of data protection is coming at the right time, as part of a package of “digital resilience” initiatives.
The department has been advised that it needs to use its financial powers to ensure customers’ data is stored securely. As someone who’s been active in the industry for some years, I welcome the commitment to securing the future of social bonds, under the guidance of the Office for Fair Trading. So, too, do all the players in the sector.
Over the past decade or so, the social bond sector has been vibrant and varied, spawning entirely new concepts and industries. At the same time, its participants have been concerned that whatever their intentions or motivations, they would be left to pick up the pieces in the event of a catastrophic data security incident, either via legal action, the authorities or the natural disaster capital providers. This would have inflicted huge costs on businesses through multiple channels and hit the digital resilience programme in a number of ways.
They have been concerned that whatever their intentions or motivations, they would be left to pick up the pieces in the event of a catastrophic data security incident
A key priority for the BEIS seems to be the completion of the DfT’s Digital Audit, a detailed survey of the digital resilience of major websites, apps and services. If the results look alarming, it’s not just about the government’s confidence in Britain’s digital resilience but also its ability to accurately assess its own readiness. Is this an easy survey to do, given our lack of clear data standards or self-reporting measures? Is it a matter of identifying good practices and checking to see that they are widespread, while quantifying those areas where improvements are needed? Or, as a digital literacy and technology expert put it: “It could just be a digital hygiene exercise to ensure they don’t go and break everything again.”
Social bonds were on the wane anyway before the outbreak of the data crisis – and this probably was the nudge the beleaguered sector really needed to restart. The opportunity is now to reclaim that part of the sector’s potentially vast potential, if the government is serious about its reforms.
It’s inevitable that social bonds won’t be a growth market for much longer. You will hear a lot about the potential of enterprises such as Stellar, a London-based innovator in blockchain digital security technology, and several other British firms looking to take advantage of the “big data” opportunities. Equally likely, however, is that new models of debt funding will be sought to compensate for current challenges. A pilot programme developed by the Goldman Sachs Lab, for example, uses interest payments for things such as electric car charging to address social needs. That is a potentially exciting approach to social finance. I’m glad to see the government recognising the vital role digital resilience could play here, as well as exploring ways to break down the obstacles to doing so.
I hope it doesn’t take a major ransomware or data breach event before the sector is sufficiently positioned to fully capitalise on this brief window of opportunity.
· Philip Bailey is chief executive of Ciaran Callaghan & Co, formerly known as Legacy Payment Trust