Your Financial Data Is A Treasure Trove: Here’s How You Can Protect It

Your financial data is incredibly valuable. Not only does your financial data include your pin numbers, account numbers and passwords, but it is also a treasure trove of valuable information about you as a person. The trail of breadcrumbs from your financial activities will reveal general information about you, like

Your Financial Data
Image source: Wikimedia Commons
  • Your income

It looks like you have a couple thousand dollars going into your bank account each month. Also, why is all that money going to your credit card? You should consider putting more into your IRA, because it’s looking pretty bare.

[REITs]

Q3 hedge fund letters, conference, scoops etc

  • Your gender

Not only is your account linked to a Mrs. Jane Smith, but your monthly mascara purchase at Target is a pretty strong indicator.

That’s fairly obvious, and most people would expect general traits like their gender to be revealed alongside their financial data. It is important to consider that your financial breadcrumbs can also be used to reveal very specific, intimate and personal details about you. For example:

  • You’re pregnant

Why else did you suddenly stop buying pregnancy tests at Walgreens every week?

  • You’re addicted to cigarettes

You buy a pack of menthols every day. Four months ago you also started buying nicotine patches, but you still buy the menthols, too.

  • You suffer from depression

You might have been buying all those self-help books on Amazon for somebody else, but when you started getting billed by a therapist and purchasing prescription drugs, it was clear that you’re feeling a little down.

You see, our financial data can be incredibly personal and private. It’s no wonder that when our financial data is mishandled, we feel violated. Bad actors could use that information to completely wipe out our life savings or stealthily stalk us while selling our personal data to 3rd parties.

Fortunately, most financial institutions know that your data is valuable, so they take sufficient precautions to protect it. Financial institutions know that if they experience a data breach, then they will suffer alongside their customers. Therefore, your bank does not reveal your account info, and your credit card company is not selling every detail of your credit card transactions (although, they do sell some details and they share some details within their network of partners.) It is in their best interest to handle your financial data appropriately, in order to keep you as a customer.

It’s easy to see how access to our financial data could be abused for nefarious purposes, but it’s more difficult to understand how our financial data could be used to benefit us. Imagine a person, let’s call him Stan, who you fully trusted with all of your financial information–credit card history, bank account passwords, brokerage accounts–everything. Now, imagine that Stan had one job: to make sure that every dollar you earned was used as efficiently and effectively as possible. For example, Stan could look at your credit card statement, see your cell phone bill, and then tell you, “Hey, currently you’re paying $50 a month for your cell phone. Did you know that you can get a plan with the exact same features for only $30 a month by switching carriers?” Stan could also look at your brokerage account and suggest something like, “I see that you really like purchasing renewable energy stocks when their price-earnings ratio is below 15:1. Have you checked out Green Solar Company?” Let’s say that Stan was also helping everyone you know to maximize their spending efficiency. This would give him some pretty unique insight. Additionally, he could tell you, “You’re putting half as much towards retirement as most people your age. They’ll all be able to retire at 65, but you’ll have to wait until you’re 80 years old. Would you like me to develop a plan to get you back on track?” Stan could analyze your financial breadcrumbs to provide feedback and suggestions on every dollar earned and spent.

It would be great if we all had a Stan with us 24/7 to help us out, but it would be prohibitively expensive for most people to hire someone with the knowledge and skills necessary to provide this type of highly-detailed financial advice. However, computers can handle this type of analysis with ease.

So why doesn’t everyone have a “Stan app” on their phone that does this for them?

Because we know that it would be a very risky decision to hand over all of our financial data to an organization we know nothing about.

But what if we could receive insights like the ones Stan provides without ever giving our personal data to an unknown 3rd party? In the example above, this could be accomplished by transferring all of Stan’s knowledge and skills from his brain into your brain. Then, you could look at your own credit card statement and automatically know that you are overpaying for your cell phone. You wouldn’t need to trust Stan to analyze your data anymore, because you could analyze your own data. Of course, this is impossible to do with humans, though there is an intrepid group of graduates from Stanford University who have developed a way to accomplish this task by using computers.

Hypernet is a startup located in Palo Alto, CA. Their interdisciplinary team has developed an innovative programming model which is based on the principle of stochasticity, as opposed to determinism. Without going into too much technical detail, this unique design enables many new and useful capabilities. Among the most exciting features is the ability to analyze sensitive data in a fully privacy-preserving manner.

Currently, there is only one way for computers to do the type of financial analysis that Stan provides. First, you would gather all of your financial data on your computer. Then, you would send that data to a 3rd party who would compile and analyze it using their own software (They would likely keep a copy of your information in order to build off of it in the future). Lastly, they would send you back the results of their analysis.

With Hypernet’s programming model, your sensitive data never leaves your device– it can stay in one secure location. Instead, the financial data analysis algorithm would come to your device to analyze your data. And since the algorithm would be built on top of the Hypernet programming model, the algorithm must follow the rules inherent to that programming model.

One of these rules is privacy-preserving data distribution. This means that the analysis is done across a distributed network of thousands of devices, and no single device has data that can be used to identify the owner of that data. This means that if a bad actor was interested in stealing your financial data while you were using Hypernet, they would have to hack into each of the thousands of devices involved in the computation, and then sort through all that data–quite an unsavory task.

Given the value and utility of our personal financial data, it makes sense to put it to use for our own benefit. Analyzing our financial breadcrumbs will help us save money, find enjoyable new ways to use use our money and help us all to achieve a higher standard of living. Finally, there is a method being developed for doing this in a manner where we don’t have to trust a 3rd party with our data. Soon, we will be able to reap the benefits of analyzing our financial data while decreasing some of the key risks currently associated with doing so. Using Hypernet’s privacy-preserving programming model, we can learn from our financial data without exposing it to the outside world.

Article By Jake Leih, CMO, Hypernet

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