The use of personal data could boost innovation, create savings and unleash value of 1 trillion euros ($1.27 billion) annually for Europe's economy by 2020, according to a report by Boston Consulting Group.
The study, published on Wednesday, is one of the first to quantify the value of all digitally available information about individuals in Europe. This covers everything from information people reveal about themselves on social media to data produced by online transactions.
"Leveraging personal data and digital identity can be a key growth driver in an overall stagnant European economy, potentially worth up to 8 percent of gross domestic product by 2020," John Rose, a senior director at Boston Consulting Group (BCG), who co-authored the report said.
In the report, Rose forecast the quantifiable benefits of personal data will reach 1 trillion euros annually by 2020, with private and public organizations reaping about a third of the total value, and consumers the rest.
BCG said consumer benefits of 670 billion euros ($854 billion) will be generated by reduced prices from data-driven cost savings, time savings from self-service transactions, and free online services and mobile applications in exchange for sharing data.
Gains for private and public sector companies will come from additional revenues and cost savings. For example, BCG estimates that the health care sector can achieve cost savings of 10 to 20 percent by better leveraging personal data.
The report authors added that the 1 trillion euro forecast for 2020 could be an underestimation of the economic value of personal data.
"This may well turn out to be a conservative estimate, since we based it on today's major use cases, which represent only a subset of the applications we will see ten years from now," the report said.
"Nor does it include second-order effects. For example, if personal data applications improve medical care and prolong lives that could mean people spending more money."
However, the authors warned that the economic benefits of personal data could be lost if organizations failed to gain and retain consumers' trust in their ability to handle data securely and appropriately.
"It is critical that industry takes the lead to establish a trusted platform for the flow of personal data. Otherwise significant value for consumers and industry alike will be lost," said Manuel Kohnstamm, chief policy officer at Liberty Global, a cable company which sponsored the BCG report.
Recent high profile data breaches include hackers targeting Dutch electronics firm Phillips's servers in August. More than 200,000 email addresses were made public, along with customer information such as names, postal addresses, birthdays, passwords and phone numbers.
Data harvesting by companies and governments is also a controversial topic in Europe. Europe is seen as having tougher data privacy laws than the U.S. Last month, the European Union asked Google to change the way it gathers personal information. (Read More: Google Opens Window Into Secretive Data Centers)
The European Commission wants to tighten some regulations on personal data under the General Data Protection Act, which it proposed at the start of this year.
— By CNBC.com's Katy Barnato