Jersey Data Trusts - Administering the New Asset Class
- raharje
- Sep 16, 2024
- 5 min read
The recent leaps in performance of AI models such as ChatGPT are highlighting the enormous value of the world’s data, without which AI models cannot function and the promised AI solutions to global challenges will not materialise.
Anticipating an explosion in data asset value and leveraging its position as the leading global trust jurisdiction, Jersey has been pioneering novel data trust structures and services which enable organisations to safely and securely share their data with third parties for commercial benefit.
A data trust structure is used to pool data or rights to data from multiple parties. The trustee stewards the data according to the purposes of the trust and can make the combined data or associated data insights available for use by third parties, with the option to monetise access thereby increasing the value of the data assets.
Jersey data trusts share many of the features of conventional trusts which can hold a range of assets, but given their novelty they are best illustrated by example:
Property & Real Estate
In the real estate sector, property developers and investors collaborate over long development cycles to maximise value from their property assets. From planning, through architectural design, engineering and construction on to management of a development, numerous parties collaborate using a myriad of different digital tools. A Jersey data trust provides an entity to hold all the data about a development from all collaborators and maintain the single source of up-to-date information. In the development phase contractors can access this data to dramatically improve efficiency and reduce development time as well as lower construction insurance premiums. In the operational phase, assets can be managed more efficiently and localised activity data can be monetised (for example through advertising). As well being a highly flexible, tax neutral entity, a Jersey data trust dramatically reduces the number of data sharing agreements that need to be put in place between collaborating parties. The trustee ensures that data is used appropriately and in compliance with local regulations and laws (for example data protection) and can be charged with maximising asset value for beneficiaries. These data trusts can be structured in a similar manner to Jersey Property Unit Trusts.
Smart Cities
The numerous smart cities emerging round the world are founded on bringing together multiple local data sets from disparate organisations and citizens. This enables digital tools such as Digital Twin platforms to be used across a range of functions to deliver more effective urban planning and design, improved transport systems and better public services.
Jersey data trusts offer local authorities a simple legal mechanism to govern and manage the flows and uses of data across all parties involved in a smart city. The Jersey trustee, as an independent steward (closely regulated by the Jersey Financial Services Commission) can promote trust amongst citizens that data about them will be used according to their rights and preferences. The trustee can also take responsibility for managing large personal datasets, as local authorities frequently lack the skills, capacity or appetite to act as data processors on behalf of third party organisations who are contributing data to smart city platforms. Smart city data trusts are typically established for the primary purpose of improving public services and better place making, but there is also the option to monetise access to local services and data according to strict criteria. In a sign of the potential value of smart city data, in July this year, the Chinese city of Deqing listed its city-level data assets on the Shanghai Data Exchange at a valuation of $26 million[1]. As smart city technologies continue to mature we can expect more and more local authorities to need data trusts and seek to maximise the value of their local data assets.
Health Data
Digitisation of health records, advancing computer power, AI, and affordable DNA testing have revolutionised the potential of health research to drive disease prevention, improved treatment efficacy and patient well-being. The health sector is embracing data analytics and AI tools, with public health bodies making health records available for research and health providers across the world starting to monetise access to their digital health databases. The nascent commercial market for health data had an estimated value of $0.4bn in 2023[2] with pharmaceutical, life sciences and AI companies all clamouring for data and the market set to grow rapidly.
A Jersey data trustee can support health providers to leverage the value of health data generated within their operations and contribute to improved health outcomes. A Jersey data trust structure can be used to safely and securely pool health data from various international jurisdictions, respecting the various local health data protection laws and regulations, and make anonymised data available for use by international companies. Importantly the presence of a regulated Jersey trustee and data governance rules baked into the health data trust can give patients confidence that their personal health records will not be misused and encourage them to opt in to data sharing with trust.
Jersey is an agile and innovative business environment
Digital Jersey ignited this latest innovation in the Jersey trust sector in 2021 by convening an interdisciplinary working group comprising Jersey trust companies, law firms and technology businesses alongside colleagues from Jersey Office of the Information Commissioner and Jersey Finance. The group began by exploring the potential for Jersey data trusts and launched a pilot project in 2022, co-funded by Digital Jersey and Jersey Office of the Information Commissioner, to establish the world’s first legally constituted data trust, LifeCycle[3]. LifeCycle is an example of a smart city (or in this case smart island) data trust. The trustee has equipped 500 Jersey cyclists with smart bike-lights and collects their geo-spatial journey data into LifeCycle. Local organisations can apply to access the aggregated data insights to inform decisions on how to improve cycling conditions across the island. Following on from the success of LifeCycle, Digital Jersey is now seeking to establish a pan-Jersey data trust to combine local sources of data, starting with data generated from local technology projects grant funded by Impact Jersey[4] the local innovation fund.
Jersey as a jurisdiction is uniquely placed to lead this new segment of the trust sector because of its sophisticated trust law which supports using flexible data trust structures to govern data and a thriving community of professional trust companies, all of which are closely regulated by the Jersey Financial Service Commission and are collectively administering thousands of highly complex trust structures. That Jersey is the pioneer in this new field speaks to the business community’s forward-thinking mindset, ability to collaborate across disciplines and a thriving entrepreneurial spirit.
A Highly Promising New Asset Class
While it’s hard to quantify the potential of the nascent market for data trusts we can look to some proxy indicators to show the potential. For example:
The six largest companies in the world today are Microsoft, Apple, NVIDIA, Alphabet, Amazon and Meta. All of them are heavily data driven technology companies and their combined revenues represent over 1% of annual global GDP. These companies are the at the vanguard of extracting value from data. Everyone else will ultimately follow.
The earliest example of data trust like intermediaries is credit bureaux. For decades banks and financial institutions have been prepared to pool their customer’s credit and employment history data into the credit agencies and then buy back prospective customer profiles from the pool to support lending decisions. The OECD estimated[5] that revenues in 2017 from selling access to the data in just the US market were US $9 billion.
Here in Jersey we firmly believe that the data asset class will grow quickly and to large scale. With that this new offshoot of our long established, highly regarded trust sector will flourish and we are delighted to be welcoming new clients to our trust centre to establish data trusts across the property & real estate, smart city and health sectors.
For support in establishing your Jersey Data Trust please get in touch. Or why not pay a visit:
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