Data breaches dictate a new look at consumer trust strategy

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It seems every other day there is news about another high-profile cyberattack that affects consumers across the globe — all of which can have a serious impact on consumer trust. While it is of critical importance in any industry, the idea of trust is critical in the financial services industry; the loss of trust can dramatically impact business.

Consumers have a right to be concerned. There has been a steady drumbeat of news around data breaches involving the personal and financial data of millions of consumers. By October of 2018, the number of compromised personal data records for the year had already surpassed the total number of breached records for all of 2017. This included Facebook’s disclosure of 87 million records breached, Exactis’ report of 340 million records breached and Starwood’s admission of 500 million records breached.
Today’s consumer is highly aware of and concerned about these threats. According to the Unisys Security Index, the only recurring snapshot of security concerns conducted globally, security concerns regarding identity theft and bankcard fraud top the list worldwide — with 68 and 66 percent of those surveyed saying they are seriously concerned about identity theft and bankcard fraud, respectively.

Results showed that security concerns globally among individuals continue to hold at the highest level since the first study was conducted in 2007.

Though new regulations like GDPR strive to protect consumers’ data privacy, the survey found that a majority of individuals around the globe remain skeptical in an organization's ability to protect it. In light of these concerns, banks and financial institutions need to demonstrate to their customers that they can uphold the swiftly evolving data privacy regulations being put in place worldwide without compromising the customer experience. That is, customers want to be able to transact their financial business anytime, anywhere and on any device. They also want the convenience of institutions being able to share data safely. For example, if Fidelity manages their investment portfolio, they expect that the security standards, protocols and tools will be in place to allow Fidelity to pull in their data from a JPMorgan bank account or a Bank of America mortgage account.

Meeting the dual — and sometimes competing — goals of protecting data privacy while also providing a great customer experience is a definite challenge. However, it is a challenge that financial institutions and other companies must meet if they are to continue to grow and thrive.

To provide the customer experience that consumers expect and demand, it’s important to understand where and why security concerns exist and take steps to proactively address and alleviate risk from day one.

First, it’s important to prioritize authentication procedures, since this is a crucial juncture where identity theft and bankcard fraud occur. Companies must have the right processes, checks, systems and tools in place to guarantee that when a customer signs in to an account, the person is who they say they are.

Authentication, of course, is the key when considering connected devices. There are two aspects to this authentication. First, there is the hardware: the smartphone, smartwatch or other device the consumer is using to connect to their bank or financial institution. Many of these devices today have authentication protocols that protect the device — often biometric in nature.

Second, there is the application itself. Currently, there does not tend to be a second level of authentication at the application level, unless an especially large or complex transaction is requested. If that is the case, the customer is usually routed to a company representative who requests an in-person meeting to complete the matter.

However, more and more consumers are going to be using their devices to do greater numbers of large-scale and complex transactions — such as opening a mortgage or transferring significant sums of money. Banks and financial institutions need to consider providing an extra level of security within their applications to protect their customers, such as requiring authentication by voice or some other mechanism at the application level. All this must be done while providing a great and secure customer experience, which is central to maintaining a competitive advantage.

Additionally, banks and financial institutions need to secure data as it moves between systems across multiple companies. The socioeconomic environment is shifting to require the sharing of data between financial institutions and organizations that may not be regulated as rigorously as their financial counterparts. This increases risk and exposure, creating the opportunity for data breaches to occur.

Overall, these findings suggest that a majority of today’s bank customers are seriously worried about identity theft and card fraud and the overall safety of their data. They know that you, as their financial institution, house their personally identifiable information. Formulating a proactive and preventive security strategy will go a long way to building your customers’ trust and ensuring their continued loyalty.

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