“A whole lotta shakin’ goin’ on!”

The silhouette of a pianist playing his piano, with musical notes all around him.
Written by Mark Gentry,

The refrain from Jerry Lee Lewis’ 1957 rock n’ roll classic was recently quoted by Chris Skinner (author of the book “Digital Human”) to describe the impact of digitalization in Financial Services. In a recent interview in “The Financial Brand” he summarises how digital technology is revolutionising the global banking ecosystem, with banks losing their traditional control of customer data.

“This massive cultural change – moving from a control freak to a curator – is inevitable and irresistible, with an open sourced structure being the only option going forward.”

This comment reflects a commonly held view, that open source digital technology (based largely on blockchain), is revolutionising how people interact online. The expectation is that consumers will take control of their own digital identity, lifestyle and associated financial needs, granting specific and limited access to financial data only where necessary to enable specific transactions to take place. In this scenario, digital financial transactions are expected to evolve into a supporting role, enabling a broad range of other digital activities rather than being a separate process in themselves.

There is a major issue with this scenario, however: consumer trust. In its recent report “Great Expectations: How technology impacts consumer trust”, the UK MRS Delphi Group concluded that high profile data breaches are currently playing a significant role in undermining trust in specific brands, with security of personal data being the single largest driver of brand trust.

The report highlights two key points:

  • Data issues increasingly have broader implications than simply causing limited transactional difficulties – they affect the entire perception of a brand and serious breaches can have potentially catastrophic consequences for their broader business
  • Consumer beliefs remain rooted in the “old world” view of data: banks and other institutions are responsible for protecting the data which they hold on our behalf

In our own research carried out in late 2017, we identified concerns over data security as by far the largest barrier to adopting digital financial technology. This deep-rooted fear of banks “losing” your data seems worlds apart from the “Brave New World” outlined earlier.

What this means in practice, is that the mass adoption of new new digital financial economy requires more than just a simple process of migration; it requires a fundamental shift in the mindset of consumers. To make best use of new systems, consumers would need to stop passively handing over their personal information for banks to manage, and take responsibility for actively owning and managing their own digital data and identity.

This is a big step, and is unlikely to happen quickly. Many consumers have only recently got to the stage of trusting online banking for a limited range of transactions. Consumers would need to feel 100% comfortable with the technology and fundamentally reassured that their data is safe before they will be willing to trial new and relatively untested services.

All in all, there may be “a whole lot of shakin’ goin’ on” for financial providers but most consumers are not yet “pickin’ up good vibrations”. Change is likely to remain slow until the key barrier of data security fear is addressed.

By Mark Gentry

Mark Gentry

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