How your data can be used to save you time and money

It seems that in almost every customer service interaction today, online or in person, we are asked to sign up to a loyalty program, often with the incentive of an immediate discount offer. It’s clear that your data is king, and worth far more than your purchase.

Primarily, companies use this data to market directly to you, showcasing products and services that meet your buying trends in a bid to get you to spend more. Is this a bad thing? I would argue it’s not.

In today’s digital world, we are bombarded by advertising; in fact, it’s estimated that we see anywhere between 4,000 to 10,000 ads each day, so they might as well be relevant to you. Personalised ads might increase the likelihood of impulse purchases, which aren’t usually a great move financially, but it may surprise you to know that target recommendations and advertising can also save you money and help you make better lifestyle choices.

There can be advantages

One example that comes to mind is the way some digital banks, known as neobanks, are using your data to get you a better deal. These institutions have a wealth of knowledge about your spending habits, and some of them are using this to suggest utility, telecommunication or even financial products and home loans that have the best chance of saving you money, because the recommendations are made with a complete picture of your financial situation.

An argument that comes up from time to time is the idea that health insurers may tap into fitness or diet tracker data to set individual premiums. This is often viewed negatively, and there is a privacy aspect to consider, but personal insurances, such as life insurance have been using health information to set premiums for a long time. The use of personal information in this way might actually lead to savings or encourage people to make healthier choices.

A level of risk does exist

Of course, there are always risks, and these come in two main forms. One is the risk of a data breach, whereby a hacker gets hold of your data by ‘breaking in’ to a company’s database. When this happens, unscrupulous individuals or organisations can get hold of everything from your credit card to your identity.

In Australia, legislation came into effect in 2018 requiring companies to notify authorities if a breach occurs or is even suspected and while there is more to be done to protect us, it is certainly on the radar in Canberra.

Protecting yourself

The other risk is unwittingly giving third parties access to our data. There are some ways you can protect yourself:

1. Review your privacy settings

If you are using social media, it’s likely you are sharing more than just your opinions and your latest meal. Individuals and organisations worldwide can get information from your profiles, from basic information to your property ownership status, political persuasions, and even information about your children. One of the ways you can protect yourself is by having strong privacy settings. It’s worth reviewing a guide, such as this one, to make sure you are on the front foot.

Never share personal information, particularly financial information or passwords, on social media, even using the private message function. You can’t be sure these services have adequate security.

2. If it sounds too good to be true, it probably is

We’ve all seen those offers: ‘Get a $50 gift card for your opinion!’  While no doubt there are scrupulous research companies out there, if it sounds to good to be true, it probably is. These types of surveys are there for one reason – to collect your information.

3. Beware of scams

Unfortunately, the digital age has given rise to the cybercriminal, and there are many scams out there designed to take our hard-earned cash. The ACCC’s Scamwatch provides details of known scams and you can also subscribe to email alerts to stay vigilant, but a good rule of thumb is never give sensitive details or log-in information to anyone via email or phone.

If you are asked for these things, call the institution directly on the main phone number provided on their website, never use the number given to you in the email or by the caller. If the matter is genuine, the caller won’t mind you doing due diligence. If they get annoyed or frustrated with you, it’s a good sign that all is not what it seems.

4. Beware of ‘free’ apps

When you download an app that provides a game or service for free, you need to be aware that they are making money one way or another, and that may be through the sale of your data. You can take the time to check out their data policies or just reconsider how much you need what is on offer and whether it is worth potentially losing some of your privacy.

At the end of the day, every service we use today holds our data. As long as you are protecting yourself from scams, your data can be used to your advantage, saving you time and money.

General Advice warning

The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL 436121 ABN 49 159 583 847) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.