Big tech can’t be trusted with consumer data — here’s why banks should take over

You probably already trust a bank with your life savings. Why not your personal data?

Imagine you could set up your Android smartphone so that instead of sending your location data to Google, it would go to your bank, sort of like setting up direct deposits for paychecks. The bank would store that data securely alongside your purchase records from Amazon, your web browser history and any other information collected about you via digital means. 
Any advertiser that wanted to target you using your personal data would have to go through your bank — and follow strict rules you would set regarding that data’s use. In other words, your bank would manage your data for you, just like they would manage your financial assets.
Sounds crazy, right? But the idea isn’t as wild as it may seem. 
Consumers give their personal data away to big tech companies every day without retaining nearly as much control. Between the Cambridge Analytica scandal and Google+’s massive security breach, mega-corporations have proven careless with consumer data, putting profits ahead of privacy. Consumers are increasingly looking for ways to take back ownership of their data without sacrificing personalization and other benefits of participation in the data economy.
Banks are ideally suited to step in and fill the gap. Consumers already trust banks to guide them through major life milestones like buying their first homes or planning for retirement. In addition, banks have always been held to strict data-privacy regulations that make them more careful with personal information than big tech. 
And while many banks were late starters in the race to digital transformation, they’re increasingly building advanced technological expertise and infrastructure. By employing technologies including distributed ledgers like blockchain, private cloud storage, and data encryption and tokenization, banks can leverage their existing trust networks to handle more than just financial assets. Positioning them as the most appropriate guardians of consumer data hubs.

Secure data-sharing enables a data marketplace

With banks as data hubs, consumers wouldn’t have to manage their data for themselves by clicking through endless disclosure statements or terms and conditions pages. Once a customer made a data “deposit,” their bank would manage that data on their behalf, according to the customer’s instructions about which types of data should be shared and with whom. 
In the past, banks have held back from sharing too much customer data with partners due to security concerns. It’s simply unrealistic to expect a partner in a less regulated industry, like media, to enact the robust data protections required in financial services.
However, thanks to new technology, banks no longer have to co-locate entire datasets with their partners to share data-driven insights. At Flybits, we’ve built a platform that sits at the edge of the cloud, between the bank and its partners. When our contextual recommendation engine needs access to customer data, it queries an agent behind the relevant organization’s firewall. However, the questions it is able to ask and the information it can receive are carefully limited. 
For example, in order to protect privacy, the bank could enact rules prohibiting our platform from asking questions about a specific customer. Instead, the platform would only be allowed to ask about groups — e.g., which customers are female, live in Dallas, and have researched their bank’s credit card products.
In addition, the platform will receive the minimum amount of information necessary to answer its question, and no more. The information it does receive will be tokenized and anonymized to ensure the platform can’t identify any individual customer. 
For instance, in the above example, the entire search history for each customer isn’t needed — the platform would only receive anonymized data relevant to its analysis. Once that analysis is complete, the resulting insights would be made available to the bank and its partners. 
Unlike the current adtech ecosystem, the data marketplace described above would be totally opt-in. Customers would be asked if they want to participate and they would also retain the ability to de-link their data at any time. Customer data would exist as the property of customers, not tech companies. 

Technology and regulations drive change

The digital world is more than ready for this kind of paradigm shift. In fact, it’s already happening.
Technology is on a trajectory toward decentralization. Since the mid-2000s, information on the web has moved from centralized, authoritative sources to scattered social media posts and crowdsourced sites like Wikipedia. Now, decentralized technologies such as blockchain are pushing that trend even further. Data marketplaces will flourish in an environment where personal data is no longer trapped in walled gardens or exploited by big tech.
Regulations are also driving toward a decentralized future. New laws like the E.U.’s GDPR and the U.S. state of California’s CCPA have enshrined consumers’ rights to control their personal data, including their right to delete data they’ve previously shared with companies. In the E.U., PSD2 goes even further. By allowing customers to share their banking data with any entity they wish, this law has laid the groundwork for a future where customers are in better control to get the products and services they need.
The rise of data marketplaces is just the beginning of the changes we’ll see from this paradigm shift. The marketplaces themselves will enable use cases we can’t even imagine today, similar to how the rise of social media gave way to sharing-economy startups like Uber and Airbnb. And there may be further developments we haven’t anticipated. Increasing regulations will tie the hands of Big Tech companies, forcing them to move more slowly and opening up opportunities for competitors — even ones in highly regulated spaces like finance.
One thing is certain: The next decade will be an exciting one for tech. And if they establish the right protocols and continue strengthening customer relationships through value-added experiences, banks will be at the center of it.

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