The Privacy Paradox
Ask your friends if they are concerned about companies using their personal data and the chances are high they’ll say yes. Ask those same people if they actively use services owned by any of the FAANG companies [Facebook, Amazon, Apple, Netflix and Google] and you’ll likely also get a yes (often coupled with a look that says, “Don’t be an idiot, of course I do”).
We all use technology to buy goods and services from companies who actively use our data to personalise our experiences with them, constantly refining our customer journeys to make it easier for us to get what we want.
Jeff Bezos put it best when he said: “The best customer service is if the customer doesn’t need to call you, doesn’t need to talk to you. It just works.”
The big tech companies have thrived on this premise, actively removing friction from traditional business models by using technology to make what used to be hard, easy(ier). Being obsessed with your customers is a great way for a business to operate and using your data to provide you a tailored experience has become a globally common practice.
So, what do people think about this? Unsurprisingly, most of us are aware that our data is being used and are concerned about that use. Studies and surveys about the use of personal data online show that people say they have relatively high levels of concern. However, many people also seem to recognise that in the online world, there is a trade-off between privacy and convenience — the more convenient the experience, the higher the use of personal data to create that experience.
Now for the real question, what do people actually do about their concerns? Not a whole lot. The elephant in the room is that despite saying we are concerned we still use these services… a lot… to the point where some tech companies are now worth trillions of dollars (that’s a lot of zeros). To add fuel to the fire, the population of people who are digitally active increases every year so the total addressable market continues to grow.
The academics call this the privacy paradox. Survey results may show that the privacy of personal data is important to people, but most people make very little effort to protect their data and will often give it away for free.
Why do people act this way? There is clearly a discrepancy between a person’s intent to protect their privacy and how they actually behave in the online world. There are many theories around the “why” but the reality is that people are complex and online privacy is a complex topic. Expecting a “silver bullet” answer to this question of why is silly. There is a mix of both rational and irrational behaviour that leads to this outcome, and the rationale changes depending on the context (“it’s complicated” — helpful, I know…). People much smarter than myself have been on a dedicated quest to understand why this is the way it is for many years and I won’t attempt to over-simplify their effort (but for the curious oddballs like me looking for a better understanding, I highly recommend starting here for the privacy paradox or here [or here] for more on behavioural economics).
Fortunately, you don’t have to know the “why” before you do right by your customers. It doesn’t take much for a company to do the right thing in this space. People are willing to share their personal data with your company if they trust you. We all want to be able to use our data for our benefit. What we are missing is a simple mechanism to do it in a way that allows us to change our minds in the future. Giving people control over their data in the way they want simplifies the existing complexity and shows customers that you’ve got their back.
At Tapico, we believe the best way to build this trust is to ask for consent. Ask people if they want you to automate their mortgage application using their bank data. Ask people if they want their payment data to be used to tailor their budget. Ask a person’s advisor if on demand access to their client’s data would help create better goal oriented financial plans. And always, ALWAYS have a clear avenue for people to opt out, especially when dealing with financial data. The combination of transparency and control will build the type of trust people want and rely on.
If you are a company looking to build and maintain trust with people while using their financial data for their benefit, come and talk to us. Tapico is on a mission to give companies the tools they need to help their customers successfully manage and grow their wealth. There is a lot of data out there and we want to help you help your customers use it to their benefit.
Follow us at Tapico as we build tools to make the connections between financial applications easier and more secure, ushering in the era of Open Finance.
