And the industry is an expedient and easy target for scapegoating as few people have natural sympathy for large financial institutions or think they get a raw deal.
"As the economy becomes increasingly digital… strong data protection policies will become more important to shield consumers from harm.” – The Bank for International Settlements
Yet the enduring, underlying trust in the financial security of these institutions and their protection of customer privacy remains. And again, that is particularly evident in times of financial stress when the major financial institutions always seem to gain market share – even if their community reputation is taking a battering.
Moreover, this repository of trust is persisting into the digital age as more and more varied institutions vie to provide banking services to individuals and business.
While the security of personal and organisational finances will not disappear as a fundamental desire for customers, the growing shift to a digital world, and with the rich, opaque reserves of personal data underlying new services, it is that trust in data security which may well prove the opportunity of the future.
The Bank for International Settlements (BIS), the global standard setter for the financial services industry and reserve banks, recently published a survey based on US research into attitudes to privacy.
The survey found US households say they are more likely to trust traditional financial institutions than government agencies or fintechs to safeguard their personal data. Moreover, they have far less trust in big techs.
There are disparities across the population - respondents from racial minorities in the US have less trust in financial institutions, younger respondents trust fintechs relatively more.
But as we move into a more digital world and the concept of open banking and “ecosystems” – where multiple companies cooperate to fulfil customer preferences in a seamless way – the survey highlights some fundamental challenges. Some exacerbated by the COVID-19 pandemic.
“A quarter of respondents say COVID-19 made them less willing to share data,” the BIS found. “In this group, nearly half became less willing to share with big techs. Concerns centered on identity theft and abuse of data.”
The BIS draws the obvious conclusion: “As the economy becomes increasingly digital, and new players expand further into financial services, strong data protection policies will become more important to shield consumers from these harms.” Trust will be paramount.
These findings are echoed, if not exactly replicated, globally. In Australia, a survey into attitudes to privacy prepared for the Office of the Australian Information Commissioner by Lonergan Research found the banking industry again ranked highly in terms of trust.
If the data are shaped into the form of a net promoter score (NPS) – a rigorous measure of active satisfaction where only the highest satisfaction scores are counted and negative and neutral scores are subtracted – banks were on a par with government departments (which obviously collect a lot of sensitive data) and well above other institutions.
On a rough NPS measure, banks would be 22 while loyalty programs would be -20, internet search would be -39 and social media would be -58.