How Consumer Opinions Should Shape Your Approach to Data Acquisition and Security
According to 70% of financial firm executives, privacy concerns are a key material risk. To protect your financial institution, you need to be compliant with privacy regulations, but even more importantly, you need policies and practices that help you earn and maintain the trust of your customers.
Because so much of your business relies on your ability to collect accurate, detailed information about your customers, you also need to understand how consumers feel about sharing their data. Ideally, you should use their opinions to shape your data collection, storage, and security policies in ways that protect and foster relationships with your customers. Consider the following:
Customers Want Value for Sharing Information
When you have the right data on your customers, you can tailor marketing campaigns and special offers to them, increasing the effectiveness of your efforts.
But to convince your customers to share more than the required amount of information, you need to incentivize them — 70% of consumers say they will share personal information if they perceive a value for their time and information. Incentives can be monetary rewards or gifts, but perceived value can also include personalized offers, intuitive services, and competitive pricing.
Transparency Is Critical
Beyond feeling like they’re receiving value for sharing their information, consumers want to know who’s seeing their information, what’s happening with it, and how it’s being secured.
Transparency is key when handling customer data — 73% of consumers will share more information if you are transparent about how you use their information.
Younger People, More Concerned About Privacy
Because young generations use technology at higher rates than older generations, they may be perceived as being more willing to share their data or less likely to question privacy issues. But surprisingly the opposite is true. Tech-savvy young consumers are much more likely to be concerned about privacy issues than their older counterparts.
While 33% of Gen Z have recently adjusted the privacy settings on their phones, only 17% of Baby Boomers have taken this action. Similarly, 26% of Gen Z but only 18% of Baby Boomers regularly adjust the settings on their social media accounts. In both cases, Gen X and Gen Y fall roughly in the middle.
Make sure you’re investigating this type of information and using it in your decision-making processes. Consider reaching out to various demographics with different information about data security based on what you know about the concerns of that demographic.
Customers Take Actions After Data Breaches
The cost of dealing with a data breach can be debilitating, especially for small banks and credit unions, and the fines can be significant. Because remediation costs and punitive actions hurt your business directly, you need a plan to minimize the risk of a breach and to ensure regulatory compliance.
However, you also need to understand the cautionary actions your consumers are likely to take after a breach and how these actions may affect your business. After experiencing a data breach, consumers took the following actions at the following rates:
- Disabled cookies — 28%
- Read privacy agreements more closely — 26%
- Adjusted privacy settings on their phones — 47%
- Refused to download certain apps — 64%
- Not visited or closed specific websites — 27%
In some cases, this can happen as a direct response to breaches that happen under your watch. For instance, if your financial institution has a data breach, many customers may become reluctant to download your app.
Let Customers Know How You Protect Their Data
To attract new customers and retain existing customers, you need to be clear about how you’re protecting their data. Consider sending out direct mailings or having a page on your website dedicated to explaining your commitment to privacy.
You can’t deal with these issues in silos. Privacy, data management, and information security are all closely connected, and ideally, you need a solution that addresses these risks together.
At SQN Banking Systems, we create constantly evolving anti-fraud and data protection solutions that minimize your risk of fraud, protect your assets, and help you attract and retain customers. To learn how our solutions can help your financial institution, contact us today.