Today, Financial Institutions (FIs) are transforming into digital businesses. They compete for new customers by leveraging digital channels and creating better digital customer experiences. Today’s consumers expect convenience and easy access across all devices. Yet, at the same time, FIs face tough challenges maintaining compliance around consumer privacy protection. More specifically, ensuring their data is able to be leveraged for creating digital customer experiences, while also ensuring their infrastructure effectively prevents data loss and data leakage.

“The financial services industry faces challenges with Privacy as they leverage digital channels to optimize the customer journey. Because the banking industry is very regulated, they need clear policies and robust tools in order to avoid data leakage or fraud when using new customer communication channels such as social media. Banks need tools to support them in this sense. Right now, many banks are still largely siloed when it comes to data and this often prevents their ability to quickly respond to market demands.” 

Graham Holt
GM, Digital Solutions, Daitan

Data Privacy and the Open Banking Movement

The exponential growth in consumer banking data and the desire to leverage it, combined with application programming interfaces (APIs) have underpinned open banking.  Explicitly open banking is defined as: “……. a banking practice that provides third-party financial service providers open access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions through the use of application programming interfaces.” (Investopia) 

Open banking gave rise to a number of fresh financial technology platform companies (FinTechs) that have disrupted the industry by responding to consumer demands, which is driving FIs to accelerate in order to keep pace. Today’s urgency for data-driven, technology-enabled consumer-friendly banking services is real, otherwise FIs risk losing customers to FinTech disruptors. While the top tier FIs have the wherewithal to invest to meet modern consumer needs, the mid-size banks and credit unions are more challenged by it.  

Consumer-Driven Financial Services 

Data is the cornerstone enabler of consumer-driven banking experiences. It has become the lynchpin for how FI’s find a path to increasing client engagement, strengthening loyalty and optimizing their customers’ journey. 

With all the potential benefits of leveraging data, FIs face the critical challenge of ensuring that all data exchanged throughout an expanding financial ecosystem is safe and secure at all times. FIs have to implement protocols and technologies that enable them to protect data, both at rest and in transit, as well as ensure only the right data is accessible to the right users. 

Daitan has worked on a variety of projects in financial services over the years, helping clients achieve business growth outcomes. We understand how to optimize user experience design while protecting privacy, and mitigating the impact of data loss, leakage and fraud. Here are a couple relevant examples: 

Reaching Customers via Popular Messaging Apps is What They Want

We helped a communications platform provider develop a secure means for FIs to share sensitive financial data with customers across popular messaging apps, like WeChat and WhatsApp. Our client’s FI users remain compliant with strict regulatory requirements utilizing automated data loss prevention algorithms, while allowing clients and partners to engage with their banks over familiar communication channels.

A survey by Smart Communications found that almost two-thirds (63%) of users say they would consider switching banking providers if communications don’t meet their expectations. 

For FIs it  starts by adhering to consumers’ channel preferences, and making communications feel more personalized. The same survey found that 61% of U.S. respondents say they would be willing to share more data with a financial institution if it demonstrated good use of the data by making communications more meaningful.

Capgemini says in a report on customer communications management. “It’s no longer about what you have to say and what channel you want to use. Today banks need to adapt to whatever channel, message or frequency each individual wants.”

Monitoring Communications to Enhance Data Privacy

Protecting data is paramount for every organization. Data loss can occur on any device that stores data and once it is gone, it may or may not be recoverable. According to the Boston Consulting Group, the most common causes of data loss are human error (31%), hardware failure (42%), software corruption (13%), and viruses (7%) among others. 

On the other hand, data leakage is more complex and includes the risk of sensitive data flowing between organization’s systems getting shared either accidentally or deliberately. Someone inside the organization shares confidential data with unauthorized recipients, or enables that information to be easily accessed by people who shouldn’t see it. 

Using AI and machine learning to protect data can play an important role in providing greater security for FIs. Previously, analysts and audit committees would sift through communications and check for compliance. Highly essential work that is resource intensive and costly.

We implemented an AI program to protect against data leakage by monitoring communication feeds in real time between consumers and FI employees, analyzing text for keywords or phrases that may indicate inappropriate information sharing. AI monitored communications can help enforce contracts and alert the right stakeholders when activities appear to go beyond the scope of legal agreements. AI/ML algorithms can also prevent FI representatives from inadvertently stepping beyond what they are allowed to do, such as sharing investing advice or guidance when they don’t have the proper certifications. 

These improvements represent ways that FIs can increase compliance and protect data without needing to add more human resources..

Fighting Fraud with AI and Machine Learning

Personally identifiable information (PII) is more available, and thus more exposed, than ever. 

AI opens several doors for how FIs can improve data security. Machine learning algorithms have proven their effectiveness for fraud detection and prevention, as these programs can quickly identify unusual activity that may indicate foul play. AI can compare a single transaction against massive data logs and label fraudulent behaviors with accuracy.

These programs only get smarter the more they run. Eventually, they can recognize positive trends or suspicious patterns that were previously hidden to the human analyst. Leaders can use these findings to implement stronger security protocols and protections.

Conclusion

It’s obvious that today customers are driving how they are willing to engage with banks, and FIs face challenges on multiple fronts as they endeavor to become digital businesses. At Daitan, we believe the best way for FIs to adapt and thrive is to accelerate their adoption of data-driven and AI-enable customer services and solutions that creates a foundation for data privacy, building loyalty and enabling growth.