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The must of trust: preserving customer privacy

“May I have your data?”

”Depends on who’s asking!”

Banks need data from customers to provide them with a differentiated service. They won’t get very far though, until they establish themselves as responsible and trustworthy in customers’ eyes.

While these individuals are willing to share information for a real benefit—providing historical transaction details to an account for financial planning or tax efficiency analysis, for example—they are less likely to provide information when they can’t see an advantage in doing so.  

This conflicts with many banks’ current ‘big data’ strategies where the goal is to capture customer data in the hope that it can be used to tailor a better product or offering for these customers.

The challenge for banks is that they need to differentiate themselves from the bevy of organizations that are mining customer data for malicious purposes such as snooping (the National Security Agency (NSA) PRISM scandal, identify theft, and phishing for fraudulent financial gain.

Building trust

Banks need to demonstrate three things in order to earn the trust of their customers:

  • Commitment to safeguarding customer data
  • Transparency in how they use it
  • Accountability in case they get it wrong (perhaps most important of all)

When it comes to commitment, most banks are already focusing their IT budgets on implementing systems and processes that secure communications with customers especially now that data security and fraud prevention are high on most people’s agendas.

In these times of innovation in digital and mobile banking, banks are also starting to tap into big data sources such as social media and browsing habits, and they will need to strengthen their security solutions to cover these sources as well.

That leaves transparency and accountability. Banks can demonstrate adherence to these values by adopting a strong ‘customer first’ attitude across all their channels. Here they can help nurture a relationship of trust by developing a customer charter that outlines the bank’s commitment, responsibility and accountability concerning the collection and use of customer data.

Nobody is perfect, but if the leadership fosters these values and instils them in the organizational culture, banks have the potential to appeal to customers at the emotional level. But when we do get it wrong though, we must learn from the CEO of Toyota, Akio Toyoda—just make sure you get your bow right!



Comments: (2)

A Finextra member
A Finextra member 04 February, 2014, 16:231 like 1 like

Your key point is quite true; You may have my data if I get a benefit. You would think the NSA would have an easy sell based on that definition. Privacy was recently named the word-of-the-year, which demonstrates how much attention is being placed on the tradeoff of lost privacy. One way to lessen the ethical impact of a data policy is to narrow the focus of one’s data collection. In contrast to the NSA’s dragnet policy of “collect everything now, filter to smaller amounts later,” financial institutions (FIs) need to focus on “actionable data.” Collecting only the data needed both reduces cost and the risk of offending customers. Instead of testing customer trust with an opaque collection policy, they should transparently bite off smaller data sets and use them to drive actionable insights that benefit their customers. This has worked surprisingly well for grocery store rewards programs.

Kishen Gajjar
Kishen Gajjar - Infosys Consulting - London 12 February, 2014, 10:39Be the first to give this comment the thumbs up 0 likes

Eric, some very good points there. Agree 100%. Thing is, with so much of our personal data out there on the internet today, many people don't even know WHAT is available to dragnet searches. I wonder how many people have gone beyond the point of simply 'Googling' themselves. The point I'm making is that I might even be comfortable sharing that data, focused or not, if I trusted the companies doing it. At this point, I don't trust them. They haven't given me a reason to.

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