Consumers are becoming increasingly aware of the double-edged sword that comes from broadly sharing their personal data.
My own light-bulb moment happened a couple of months ago when I logged into Amazon to update my payment credentials. I was surprised to see how many of my payment cards I had loaded into the service over the many years I’ve been a user.
I realized I’d created a substantial digital footprint just with Amazon alone. At the same time, I also acknowledged the pros and cons of sharing that and other information. The more information I allow Amazon access to, the narrower my search results will be when I use their service to locate an item or a vendor.
Maybe this is a good thing because it enhances the personalization of my experience. But maybe this is a bad thing. Perhaps there is more out there I want to find – more products, books, tools I’d like. But because Amazon’s algorithms don’t think I would, I don’t see them.
Like it or not, data analytics is creating an invisible shield around portions of the Internet. That’s going to be frustrating to consumers who use the Internet to search out the new, not revisit the old.
This will become especially important as digital natives age. Fifty years from now, the records of nearly every individual on the planet will be digitized, potentially painting a cradle-to-grave portrait or “digital footprint.” Any number of decisions will be made based on those portraits. Government, financial service providers, retailers and others will use those them to return value to individuals in the form of customized services, product terms and experiences.
There will be an evolution of the value consumers place on the security of their personally identifiable information. Today, I’m trusting Amazon to keep my information secure, but are they? Many banking and other apps present consumers with a “take it or leave it” offer. Largely, we are not given a choice of how much data we want to open up. If you want this app, you have to allow it access to your contacts. If you want another, you have to allow it access to your location.
These “take it or leave it” offers are working largely because consumers are willing to share their data if they can see the value. If you want to play Pokémon Go, for example, you have to allow access to your camera. Trust is another important reason consumers share. Today’s financial institutions have trust on their sides. But trust is delicate and must be carefully managed today and into the future.
Both trust and transparency will be key to striking a balance with future consumers who will be more savvy about how their data is being used to personalize their experiences. While today’s customers may be okay with “take it or leave it” apps, that will change in the future. Success will come to those who are clear with consumers about the information that’s being collected, how it’s being applied and with which entities it is being shared.
For financial institutions and others that want to prepare for a future in which consumers place a larger emphasis on privacy, there are ways to design fruitful and ethical data-collections strategies. Financial institutions would do well to plan now for how they will achieve competency in four areas in particular: keeping consumer data secure; providing real value in trade for the data; innovating to provide even greater value in the future; and most importantly, always tell the truth.
Eric Schurr is TMG Financial Services' Chief Strategy Officer.
