Data ethics: the bridge to better banking 

Banking is undergoing a rapid transformation, with technology and data fuelling a substantial shift in the way banks do business. While further change is certain, what this will look like — for both industry and consumers — remains less clear.

As the sector turns to advanced data analytics and artificial intelligence to secure success in the new economy, they face rising levels of complexity, driven by growing consumer distrust, constant disruption and significant policy changes — hello, open banking!

Despite these challenges, the value of data — not to mention the availability of it — will only continue to increase over time, bringing new possibilities and potential. But not all will yield the same results.

The winners will be those who first address the most fundamental challenge of all — building trust.

Data holds great power, but it must be used wisely. And before turning to new technologies, banks must first attend to ethics and governance.

The relationship between data and trust

In a recent global financial services consumer study, 33 per cent of Australians reported a fall in trust in banks. For comparison, only 13 per cent of US respondents reported a fall in trust during the same period. So, what’s triggering this growing (and disproportionate) level of discontent at home?

Unsurprisingly, the Royal Commission is one. Data is the significant other, with poor data and poor data management practices, resulting in poor customer experiences and ultimately rising consumer dissatisfaction. 

While institutions have complied with regulation and legislation, meeting minimum requirements alone will no longer stand in an environment where consumers are granted greater choice and control over how their data is used.

A fundamental challenge, requires a fundamental approach

Just as data can trigger distrust, with the right architecture in place, it can be used to rebuild and generate trust too. So, how can the industry use data to win the hearts and minds of everyday Australians?

Genuine engagement that delivers real value. Banks seeking to deepen customer connections should use data to provide tailored experiences that are appropriate, meaningful and designed to deliver real value at each point of engagement.

Practices must provide convenience… and confidence. Convenience might be expected but privacy remains a primary concern for consumers. Beyond establishing the right infrastructure, processes and procedures to protect data, banks must provide assurance that only the data that is needed is stored and used.

Ethical digital leadership. Consumers want to know the right thing is being done with their data. Those who can demonstrate a real commitment to ethical practice and leadership will hold the competitive advantage. Effective data governance combined with an ethical framework and clear principles to support transparent decision-making around data is a must.

With challenge comes opportunity

Policy changes like the consumer data right, coupled with advances in technology like artificial intelligence, bring to the sector significant challenges and risks — data discrimination, bias in machine learning and heightened security threats — to a name a few.

Yet data can enable great good too. From more personalised customer experiences and deeper consumer connections, through to the ability to identify those heading toward financial hardship, when done right, data can be used to strengthen responsible practices and even communities too.

Whether it’s mitigating risk or innovating for good, it’s clear that ethical practice and quality data has never been more important. And those who get the fundamentals right — data governance, ethics and security — will be those best placed to not only navigate the complexities faced but to truly demonstrate what better banking can look like.

GWI Consulting Manager Tim Sheehan

Tim Sheehan
Partner