Restoring Trust in Fintechs
By Ingrid Vasiliu-Feltes, MD MBA
Futurist, Globalist & Chief Ethics Officer
Trust in the Digital Era
The Digital Era has changed how society establishes and verifies trust. It poses unique challenges to corporations globally due to the numerous potential opportunities where consumer trust can be damaged or lost. A massive amount of data is being collected, stored or shared for various purposes at a high velocity which increases the risks of privacy breaches due to internal failures or external malicious attacks.
Recent articles published by World Economic Forum, Deloitte and Accenture highlight higher consumer expectations for visibility into company safety protocols, ethics policies and sustainability practices. Transparency can greatly benefit the brand of a company in this digital era and has become a powerful competitive advantage. On a global level it is concerning to note the findings in Edelman’s Trust Barometer published May 2020 which indicate that less than half of the population trust government, business or even civil society. Fintech has become a foundational element of the digital economy with innovative ways to provide financial services to customers being developed at an exponential pace. However, Fintech is also one of the industries that suffers from a significant trust gap.
Reasons for Mistrust
Some of the major reasons cited are: fear of the unknown, accelerated pace of innovation, public exposures of existing privacy violations. Lack of legislature, lack of clear regulatory guidelines, and lack of industry standards only exacerbate the mistrust. Too often Fintechs do not invest sufficient time and effort in planning and deploying state of the art digital ethics programs with effective data governance and cybersecurity platforms. Therefore we have witnessed frequent breaches of critical data storage, poor data hub architecture design, poor collaboration among data management stakeholders, algorithmic bias, lack of inclusion and lack of purpose. Many of the scandals made public that severely damaged customer trust highlighted the lack of implementation ethical data controls throughout the supply chain (acquisition or collection, aggregation, sharing, analysis, monetization, disposal) and at all levels of the organization including board members and shareholders.
The Financial services industry ranks high in the number and cost of security breaches with IBM’s Cost of Data Breach Report revealing $5.85M for an average cost per breach which is $2M more than the global average for all industries. Cybersecurity threats rank high among all industries, however a recent World Bank report shows a 15% increase in the fintech industry over the last year. The most common threats faced are phishing attacks, as well as data-, cloud- and application security breaches.
Repairing Trust
Attaining Digital Trust is defined as conducting transactions on a personal, societal and business level in a safe, secure, ethical and reliable manner.
In addition to designing robust data governance programs, there are a few additional methods to regain trust. Providing a social proof of work, transparency and aligning data policies to a greater purpose are frequently listed as drivers of consumer perceptions.
Applying design thinking foundational principles in building a culture fo digital ethics and full leveraging technology to strengthen cybersecurity and trust can contribute greatly to reducing the existing widespread consumer mistrust. Examples are decentralized data organizations, ethical AI platforms, customized IoT for Fintech and quantum computing to enhance cybersecurity defense systems.
Additionally, a significant revision of the current data privacy models might be required if we aim to fully repair societal trust in Fintechs. One of the more intriguing global proposals that can greatly benefit the Fintech industry is the Data for Common Purpose INITIATIVE which aims to tackle the broader lack of trust in technology.
Maintaining Trust
Organizations can create digital trust by designing and implementing comprehensive digital ethics programs and building a lasting culture of digital ethics. Only by collaborating towards creating a more responsible data governance framework globally can we achieve a sustainable societal trust in fintech companies. As a recent World Economic Forum report highlighted, we need to co-design, pilot and scale forward -looking interoperable and trustworthy data policies that rule innovation and accelerate ethical data use practices. Establishing data intermediaries that can be viewed as trusted digital agents by consumers, as well as fostering empowered data societies and building a strategic roadmap for cross-border data flows are a few of the pathways suggested by global experts.
- NFTs- to trust or not to trust? - June 2, 2021
- Fintech Future-Disrupt or Be Disrupted - May 2, 2021
- Fintech Future- Embracing ESG - April 11, 2021
Stay connected