The Intersection of Trust, Data Security and the Financial Industry
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This presentation focuses on the intersection of trust, the financial industry and data security/privacy. Ben Boyd, Edelman's president of Practices, Sectors and Offerings, discussed consumer's low trust in the financial industry, the critical role data security plays in driving consumer trust and how companies should think about using data security to bolster trust in their organizations as security has moved from the backroom to the boardroom.
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The Intersection of Trust, Data Security and the Financial Industry
- 1. The Chertoff Group: Financial Security Series Trust, Reputation, Data Security & Privacy and the Financial Industry Sept. 9, 2014
- 2. “Trust is the foundation of all relationships, including those between enterprises and the markets they serve. As our world becomes more connected and more dependent on cloud and mobile technologies, maintaining control over trust must be a top priority for all CEOs, CIOs, CISOs and IT security managers. When trust is compromised, business stops.” - Jeff Hudson, CEO, Venafi
- 3. We are living through a period of profound transformation.
- 4. PYRAMID of AUTHORITY PYRAMID of COMMUNITY DIAMOND of INFLUENCE The new dynamic CEO BOARD OF DIRECTORS ACADEMICS TECHNICAL EXPERTS ELITE MEDIA GENERAL POPULATION EMPLOYEES ACTION CONSUMERS SOCIAL ACTIVISTS
- 5. Two related, but different, critical success factors tactical behavioral engagement today yesterday tomorrow REPUTATION TRUST Stakeholders’ aggregate analysis of past behavior Stakeholders’ expectation of future behavior based on past performance REPUTATION reflects how stakeholders feel about you today ... while TRUST inherently facilitates how they will act with – and for – you in the future.
- 6. Trust as a business asset There is no business objective which can not be aided by trust and positive reputation or hindered by their absence. They are vital to the very definition of business value.
- 7. The state of trust
- 8. #1 #2 NGOS BUSINESS GOVERNMENT Trust remains stable in a volatile world TOTAL TRUST TRUST A GREAT DEAL MEDIA 63% 64% 22% 23% 2013 2014 57% 52% #3 17% 16% 2013 2014 58% 58% 17% 16% 2013 2014 48% 44% #4 16% 15% 2013 2014
- 9. TECHNOLOGY 79% 58% 56% 54% 55% 53% 43% 47% 76% AUTOMOTIVE FOOD AND BEVERAGE CONSUMER PACKAGED ENERGY PHARMACEUTICALS MEDIA BANKS GOODS 70% 66% 65% 59% 59% 51% 51% TECHNOLOGY AUTOMOTIVE FOOD AND BEVERAGE CONSUMER PACKAGED GOODS ENERGY PHARMACEUTICALS MEDIA BANKS +3 +12 +10 +11 +4 +6 +8 +4 Technology leads, finance trails 2009 2014 2009 VS. 2014
- 10. Security critical to consumers trust’ of U.S. consumers worry about the security of their personal information. Temkin Group "Consumer Benchmark Survey", May 5, 2014 of U.S. consumers don’t believe organizations care about their private data and keeping it safe and secure. HyTrust Inc., the Cloud Security Automation Company, March 2014 of global consumers believe failure to keep customer information secure has a significant negative impact on trust in a company 2014 Edelman Trust Barometer: Financial Services Industry 74.8% 72.5% 80%
- 11. Financial information greatest concern Proprietary study conducted by Edelman in 2012 found… 17% 13% 12% 28% 26% 36% 78% 90% Financial information Personal information Emails Health information Frequent purchase / shopping data Content posted by you to social networks Content posted by others to social networks Browsing activity
- 12. 92% 84% 78% 77% 69% 63% 50% 50% 43% 37% 69% 33% 51% 48% 12% 27% 12% 9% 11% 6% 23% F INANCE ONL INE SHOPPING & RET AI L MEDICAL & HEAL THCARE GOVERNMEN T SOCIAL NETWORKIN G T ECHNOLOG Y NEWS & MEDIA AUTOMOT IVE FOOD & GROCERY GAMING UT I L I T IES* 51-point gap in expectations Importance of privacy and security in each industry (global) Trust in each industry to protect personal information (global) 23-point gap in expectations Financial industry not meeting customer security needs
- 13. Actions your customers will take when you falter Proprietary study conducted by Edelman in 2014 found… 56% 40% 29% Political Action (sign a petition, contact a politician, meet a representative) Stop/Reduce Technology Use Social Activity (post content to social/business social media, write an op-ed or letter) 53% believe government should regulate the financial services industry more
- 14. We must build trust
- 15. Trust has tangible benefits DISTRUSTED COMPANIES _ + TRUSTED COMPANIES Refused to buy products/services Chose to buy products/services Criticized them to a friend/colleague Recommended them to a friend/colleague 19% 33% 73% 67% Paid more for products/services 30% 44% 54% 85% 75% Bought shares Shared negative opinions online Sold shares Shared positive opinions online
- 16. Key attributes that build trust ENGAGEMENT LISTENS TO CUSTOMER NEEDS AND FEEDBACK TREATS EMPLOYEES WELL PLACES CUSTOMERS AHEAD OF PROFITS COMMUNICATES FREQUENTLY AND HONESTLY ON THE STATE OF ITS BUSINESS INTEGRITY HAS ETHICAL BUSINESS PRACTICES TAKES RESPONSIBLE ACTIONS TO ADDRESS AN ISSUE OR CRISIS HAS TRANSPARENT AND OPEN BUSINESS PRACTICES PRODUCTS & SERVICES OFFERS HIGH QUALITY PRODUCTS OR SERVICES IS AN INNOVATOR OF NEW PRODUCTS, SERVICES OR IDEAS PURPOSE WORKS TO PROTECT AND IMPROVE THE ENVIRONMENT ADDRESSES SOCIETY’S NEEDS IN ITS EVERYDAY BUSINESS CREATES PROGRAMS THAT POSITIVELY IMPACT THE LOCAL COMMUNITY PARTNERS WITH NGOs, GOVERNMENT AND 3RD PARTIES TO ADDRESS SOCIETAL NEEDS OPERATIONS HAS HIGHLY-REGARDED AND WIDELY ADMIRED TOP LEADERSHIP RANKS ON A GLOBAL LIST OF TOP COMPANIES DELIVERS CONSISTENT FINANCIAL RETURNS TO INVESTORS
- 17. Engagement & Integrity build trust most STATED IMPORTANCE HIGH-PERFORMING UNDER-PERFORMING ON HIGH PRIORITIES ON HIGH PRIORITIES ENGAGEMENT INTEGRITY STATED PERFORMANCE OPERATIONS PURPOSE PRODUCTS & SERVICES Now tablestakes, in 2008 Operations were much higher in importance for building trust. UNDER-PERFORMING ON LOWER EXPECTATIONS HIGH-PERFORMING ON LOWER PRIORITIES BUSINESS IMPORTANCE VS. BUSINESS PERFORMANCE ON 16 TRUST DRIVERS - GLOBAL TRUST-BUILDING OPPORTUNITY QUADRANT
- 18. Behaviors impact trust If companies exhibit these positive behaviors... …it will have its greatest impact in these clusters 80% 85% 85% 83% 86% ENSURES QUALITY CONTROL IN PRODUCTS PROTECTS CUSTOMER DATA RESPECTS EMPLOYEE RIGHTS RESPONSIBLE SUPPLY CHAIN MANAGEMENT PAYS APPROPRIATE LEVEL OF TAX ENGAGEMENT INTEGRITY PRODUCTS & SERVICES ENGAGEMENT INTEGRITY PRODUCTS & SERVICES ENGAGEMENT INTEGRITY ENGAGEMENT INTEGRITY ENGAGEMENT INTEGRITY PURPOSE
- 19. The key to moving forward
- 20. … a period of profound transformation Boardroom from backroom When, not if Communicate & engage Take collective action
Hinweis der Redaktion
- Reputation BUILDS INTO TRUST -- The better your reputation, the more likely stakeholders are to trust you in the future. On the flip side, Trust PROTECTS YOUR REPUTATION. The more stakeholders trust you, the less likely they are to incorporate negative stories into their view of your reputation. Reputation WORKS FOR YOUR BUSINESS. Reputation has been shown to have positive effects for business – growing valuation, market share, and other critical metrics. On the flip side Trust ALLOWS YOU TO TAKE ACTION IN THE FUTURE. Trust represents your license to operate – the ability to take critical actions and hold an opinion on activities ranging from employee relations, to entering new markets, to public affairs. We’ll come back to this shortly. But first, some findings from our 2013 Trust Barometer.
- The most trusted institution in the world continues to be NGOs. It is particularly interesting to watch the rise of NGOs in Asia. NGOs are followed by business, in which Trust is stable and rising, but only in developing markets. Trust in Media had been rising for the last 3 years, but fell from 57 to 52 this year – but we have a theory as to why. Not a good story for government, which is in last place and falling fast.
- Tech remains on top globally, but with a word of caution: pay attention as cloud and data security/privacy affects this industry. There was not a large change year over year from 2013 to 2014. This longer term look points to the automotive resurrection from bailout to darling of innovation/newness. Consider the role of the car in emerging markets and role of the middle class. Looking at banks further than 2009, you would not see them at the bottom, but in the middle of the pack. Now the bottom is the new normal – “it is hard to fall off the floor” – but we also know variability in rank order by market.
- I would argue that the confidence that consumers and society feels about the ability to secure the data we all share is important to trust We are seeing it already *Quote stats This need will only gain in urgency as more migrates to the cloud and gets connected to the internet
- And fort better or worse, the brunt of this burden could fall on the financial services industry Even more than health or personal information, people are most concerned with the information that is shared with this industry
- Yet financial institutions are meeting the security expectations of their customers. A yawning gap exists between the number of people who consider data security important in these industries and the number who actually trust them to protect personal information. So, while 92% say finance is an industry in which they consider security important, just 69% trust financial institutions to adequately protect their personal information: a 23 point gap. We can and should do better.
- Specific to security issue, the actions are clear. Many will take political action, be more hesitant to use your services and engage in social activity.
- Companies who are trusted will benefit in many ways including informed publics choosing to buy their products and services and recommending them to a friend or colleague. Whereas, distrusted companies face a set of consequences, such as refusal to buy products/services and being criticized to others. Overall, trust impacts the bottom line.
- The good news is our research finds that there are several ways to actively build and influence trust…..
- Security can influence several of the key trust drivers if properly managed. Ensuring quality control in products, protecting customer data and responsible supply chain management all tie to data security. Ensuring quality control in products – as more products become more digital (like online banking apps, real-time trading and mobile payments) the security of those products is one of the main indicators of quality for customers. If people don’t trust these new platforms, they are less likely to use it and will look elsewhere. Protecting customer data – Even more interesting, protecting customer data is explicitly will have equal influence as several other issues that are often more traditionally considered essential to trust. Responsible Supply Chain Management – As you know, many of the recent breaches have been caused by a break down in security in the supply chain and vendors (e.g. Target) raising significant concerns about the security and reliability of corporate systems. As more infrastructure moves to the cloud and the amount of parties that have access to systems expands, the integrity of the digital supply chain will become even more relevant.
- Move to boardroom from backroom: The stakes and risks related to security must become a priority at the highest levels of organizations. It transcends just being a technical or legal issue. It has an impact on customer relationships, partners and the overall reputation of the company. If security isn’t already regularly on the agenda regularly for board meetings it needs to be. You must fight for a seat at the table to make sure this issue is being addressed holistically. Boards must name individuals that come from the security industry. Treat as not and if but when: Most of you probably already come with the mindset, but it’s important that you ensure people throughout your organization understand that it’s not an “if” but “when” you will experience an incident that will have significant incident and will need to engage across the company. The CMO, General Council, Customer Service and Business Unit Leaders must have a working understanding of security and must be involved in the security incident response process. They should be involved in any planning that goes on and alerted early in the process. Communicate & engage: Building trust among customers, businesses partners and society at large requires communications and engagement. This means responsibly communicating information about a major security incident without risking the ongoing investigation or speculating. It also means finding the right ways to proactively engage on these issues. I don’t mean touting security controls, but really finding ways to engage consumers with messages about how they can protect themselves and your commitment to security. Educating them on your security and privacy policies and making them easy to understand. Engagement must also be considered more broadly. From your industry peers at gatherings like this to policy makers and other industries you all touch like retail. Take collective action: share threat information among the financial industry really helps to systemically address the security challenge. Share your knowledge of best practices with other and adjacent industries. Engage with policy makers and regulators proactively to craft solutions.