The future is private
- Thought leadership
Wrestling with individual freedom in an open Internet world
The utopian dream of a transparent world built on sharing and openness helped to create the most powerful invention of modern times - the Internet. But what do those dreams mean for privacy and individual freedom? And what is the role of financial institutions in safeguarding customers’ privacy in an open Internet world?
Data is the new oil
Since its conception in the 1980s, the Internet has grown from a network designed to share information more efficiently for the common good into the biggest technological innovation of our time. Along with it, the volume of data being created and shared has increased exponentially. The statistics are mind-boggling - 90% of the world’s data was created in the last two years. 156 million emails are sent every minute.
At the same time, the biggest Internet companies have built a business model around the power and profitability of data. By creating valuable services and building a big enough user base, the likes of Google and Facebook have succeeded in monetising the volume of data generated in their platforms, for their own profit. As Bill Gates once said, ‘the future of the Internet is advertising’. Google sells the most lucrative advertising space at the top of searches, while Facebook uses its customers’ information to inform its adverts, driving greater revenue from advertisers who target a captive audience of selected consumers.
Even banks have started to acknowledge the power of the data they can harvest from their customers. This data is already used for creating spending tracker features or providing insights about customer spending habits which can inform product decisions or partnerships to save customers money or provide value for the bank. Indeed, the possibilities for financial services providers to harness this data are seemingly endless.
As the Internet has grown, so the lines between private and public have been blurred. This is largely down to the rise of social media, which encourages users to share information that would previously have remained private, to a larger public audience.
However, Internet users are becoming increasingly concerned with their privacy. In the context of the Internet, privacy is an individual’s right to remain anonymous and for information about them not to be shared without their express permission. The desire to be able to control our personal data stems from two concerns; having control over the data that third parties manage about us for reasons of personal liberty, and being able to protect against fraud in a world where an individual’s personal data can be traded by malicious actors.
European lawmakers have also reflected shifting consumer attitudes. The 2014 ‘right to be forgotten’ EU directive epitomises the pan-European drive for individuals’ rights to privacy, while General Data Protection Regulation (GDPR), which came into force in 2018, seeks to protect the rights of individuals from the risks of data sharing. A key principle of the GDPR is that the onus must be placed on companies to seek the express permission of its customers in order to use the data collected about that customer. That limits the scope of what companies can do to ‘monetise’ data - hence companies that sell on customer data are having to fundamentally rethink their business model.
Under increased consumer pressure and enhanced regulatory scrutiny, the Internet giants are showing signs of turning their back on data sharing, highlighting the need to respond to a shift in mindset by consumers and regulators. Mark Zuckerberg recently unveiled Facebook’s strategic shift towards private messenger apps, exemplified by its acquisition of What’s App, but the implication is broader. Facebook will shift its focus away from the public profile that kickstarted its user growth, towards a closed community, offering encryption and private messaging services.
So what does this mean for financial services and why is it important to us? To continue the metaphor, while banks and Fintechs may be sitting on a relative oilfield of data, drilling for oil may be more risky than first thought. Customers are increasingly astute in sharing their data and will expect clear return for relinquishing their privacy. According to the Open Data Institute, 38% of 18-24 year-olds in the UK would be happy to share data about their spending habits to help save them money. On the other hand, the risk of eroding the already fragile trust in financial services providers is high. This is particularly true for Fintechs, which do not benefit from years of ‘banked’ consumer trust.
Taking a stand for privacy
Regulation and legislation matters because, in theory, it should reflect customer sentiment. As a Swedish financial institution, Intergiro is regulated and governed by the laws of a geopolitically neutral democracy, with a passion for civil liberties and no intrusive government agencies demanding secret data dumps from corporates. On top of that, the EU is one of the flagship legislative organisations taking a stand against privacy violations.
Similarly, our revenue streams do not and will not result from the exploitation of customer data. We make money by offering financial services which businesses need to drive growth, not by selling your data to marketeers. We believe that trust by design is the only way to build services that create value for our customers. For that reason, it makes perfect sense for us to build Intergiro with privacy front and centre.
Open Banking explained
5 things we learnt at Web Summit 2019