The Data Conundrum: Finance and Privacy

In today’s digital age, financial institutions and fintech companies are constantly looking for ways to use data to offer more personalized and hyper-relevant products and services.

Product usage data provides valuable insight into user behaviour, preferences and needs, which can help the financial industry develop and deliver these tailored financial products and services. However, the use of data in the product also raises concerns about privacy.

In order to find a balance between getting the most out of data and respecting privacy, the financial industry must adopt a customer-centric approach to data management.

The benefits of data

The fintech sector is in an interesting place right now. Despite seeing a downturn in investment as part of greater economic uncertainty, it still has the unique ability to keep up with the times and swing better than banks and traditional financial institutions – after all, fintech was born out of a need to streamline the delivery of financial services through digital tools.

This agility, which is important in times of economic uncertainty when things may need to change quickly, is largely due to the fintech industry’s ability to collect and analyze more data at a faster pace. The growth of digital connectivity gives these businesses access to highly accurate real-time data that can be put to meaningful use.

The benefits of data cannot be underestimated and harnessing it in intelligent ways can be a real boon for fintech companies. Let’s take business expense management as an example. Businesses can glean so much information from the data derived from employee expenses. Cost management solutions (and the data they collect) can help business leaders and their CFOs set spending limits and provide greater visibility when monitoring and allocating budgets. And a CFO who can demonstrate such cost efficiencies in the current economic climate will be in a very strong position.

Solutions that utilize artificial intelligence (AI) allow the financial industry to analyze large amounts of data in the product, identify patterns and trends, and use this information to offer customized financial products and services that meet the specific needs and preferences of each customer.

A financial institution can use data to identify what types of savings or investment products are most popular among certain demographic groups, and then use that information to develop customized financial products specifically designed to cater to those customers.

Build customer trust with transparency

A key aspect of a customer-centric approach is the implementation of robust data protection policies and procedures. The financial industry is already heavily regulated, so in theory it should be well equipped to comply with regulations on privacy.

Any use of customer data presents a potential risk, so firms must fully understand liability issues and take appropriate measures to mitigate them. But aside from protecting the company from liability, prioritizing privacy helps build trust with your customers. In fact, you could argue that today this goes beyond trust, as consumers have higher expectations when it comes to privacy.

Recent research by Google and Ipsos revealed that 43% of respondents said they would switch from their preferred brand to a second-choice brand if the latter provided a good privacy experience. You could easily swap ‘brand’ for ‘financial service’ and it would still be completely relevant.

Using strong security measures to protect customer data from unauthorized access and breach is one of the more fundamental factors in privacy. This also includes regular monitoring and auditing of how your business collects, stores and uses data.

Another important aspect of a customer-centric approach is giving individuals more control over their data. For example, companies can offer customers secure online portals where they can access and manage their data or give them the ability to control who has access to their information and how it is used. It is worth considering all the opportunities you have to build trust with your customers, while ensuring that data is handled responsibly and ethically.

So the computer puzzle doesn’t have to be a puzzle at all.

If your business implements robust data protection policies and procedures, is open about data collection and usage practices, and gives customers more control over their data, the data problem can be turned into a data opportunity. This possibility can be further enhanced by the use of forward-looking technology that will benefit both companies and their customers to an equal extent.

About the author

Richard Rosenberg is the Group Chief Technology Officer at Spendesk, an accomplished senior manager and leader, currently managing a cross-functional, multi-regional team and a multi-million pound budget.

With a proven track record of delivery, particularly across complex projects with aggressive deadlines, involving multiple technical components and work streams, Rosenberg is experienced in bringing in strategic change, particularly in introducing agile and lean delivery techniques.

He is a true industry expert in product development, mobile and tablet and interactive TV applications, with extensive experience in high performance internet platforms.