By Ashley Bill, Lead Solution Consultant, Micro Focus
In many ways, financial services has been a data-led industry since long before anybody would have considered using a phrase like ‘data-led’. From its earliest roots, the role of finance in society has involved tracking transactions, associating those transactions with individuals, and doing so in a way which is secure, robust, and trustworthy. Today, of course, the internet’s place at the heart of every day life means that businesses in all sectors are now striving for the same kind of implicit trust with customers which has always been critical for FS – and that shift is leading to some real changes in the value of data.
Privacy as a force for change
The new reality of data-led business is leading to new ideas around how businesses can and should work with customer data. Consumers are now familiar with the idea that businesses have a set of responsibilities regarding the data they hold. Both high-profile incidents in which data is lost or stolen and regulations designed to mitigate those risks, such as the GDPR, have led to a new set of expectations. Companies need to ensure that data is held safely, used for the right purposes, and disposed of once it is no longer needed.
The technological response to this challenge has been significant. Knowing what data is stored, where it is stored, and why it is being stored can often require not just additional software, but a fundamental restructuring of underlying systems. This constitutes a substantial investment, but the new data lifecycle tools and processes that have been put into place not only reinforce customer privacy, but also give businesses deeper insight into the data they hold.
This insight can be applied as a way of generating direct benefits from the expense of data lifecycle projects, giving businesses a more rounded view of their customers by connecting silos of data and making them available for analysis. In financial services, for instance, the need to identify all of the data held on a given customer also makes it easier to see how customers of one area of the business might go on to buy other products.
Data responsibility and social responsibility
However, there is another way in which data privacy compliance might deliver direct business benefits, which is all too often overlooked. Over the same period that responsible data usage has become a key concern for many businesses, we have also seen a broader sense of social responsibility come to the fore.
Corporate social responsibility (CSR) takes on a wide range of forms, from initiatives designed to improve how diverse and inclusive workforces are, to action that addresses climate change. CSR aims to make the world a better place, and improve the organisation’s reputation in the process. In a world where consumers are very willing to make purchasing decisions on ethical grounds, this can be just as valuable as proper data compliance for a business’s performance and resilience.
And, indeed, companies have in the past done good work aligning these two considerations. A good example is the Heartland Payment Systems data breach in 2008. In that case, the company went above and beyond the legal requirements by not only disclosing the leak, but actively working to help the industry as a whole prevent similar incidents in the future. As the financial services industry strengthens its data management capabilities and new ways of working with data propagate across sectors, the opportunity to publicise socially responsible data practices seems clear.
Examples like this are, however, rarer than one might imagine. On the whole, the link between privacy and responsibility is mostly made by web browsing and communications software that takes consumer privacy as its central remit. There are various possible reasons for this gap between what could be two very closely-aligned areas. Certainly, consumers’ desire for privacy is much more widespread than their willingness to take actions, such as using a password manager or reading end user license agreements, and it may be just that we haven’t yet found the right language to communicate a passion for privacy in a way that connects with customers.
The future of privacy in financial services
With society trending towards both an awareness of data issues and a demand for ethical corporate behaviour, though, this gap feels likely to close in the not-too-distant future – and financial services is likely to be a key area where we see this play out. While social media is perhaps the sector that people tend to entrust with the greatest quantity of personal data, financial services – alongside healthcare – certainly hold the most sensitive data that a person might share.
From this privileged position, financial services firms can take the lead by proactively helping people to manage and control the data they share with the world, and teach people about the efforts being made to ensure privacy within the business in the process. Establishing a data privacy value chain with B2B partners to make sure your firm is not only secure, but that every link along the chain is working to protect the consumer, likewise casts a halo that establishes the business as proactive, trustworthy, and ethical.
The world, after all, is now data-led – and becoming more so. It’s a good time for the original data-led industry to show leadership on how to do it responsibly.
