Banks Trusted with Consumer Data, Report Finds

A survey by IBM’s Institute for Business Value found 68% of people are inclined to give banks and financial institutions their personal information or data, ahead of all other institutions with which customers interact.

Insurers, at 46%, were identified as the next highest in terms of individuals’ willingness to hand over personal information to them.

Around 91% of individuals who say they are happy to give their personal data to banks, trust them to protect that information to “a moderate extent”, the Banking on the platform economy report found. This trust level was second only to their employer.

The report suggested that as a “trusted partner”, banks are in a position to become a “conduit – or curator – of products, services, and experiences to fulfil the underlying aspirations of the customers they serve, rather than merely the financial ones” and that they would have to “substantially expand” their core business activities to do so.

It comes as recent research by Broadridge Financial Solutions showed that financial services firms intend to accelerate their investments in “next generation” technology, and that those which had invested in digitalization prior to the Covid-19 crisis were more resilient.

With the rapid evolution of banks underway, the IBM Institute for Business Value in collaboration with Oxford Economics surveyed 850 banking and financial markets executives to establish the readiness of banks to address current technological and economic disruptions, as well as their plans around the adoption of platform business models.

The survey revealed that 72% of senior executives and financial markets businesses agreed that platform business models are disruptive for the banking industry as a whole.

Additionally, 70% of executives said that platform business models were driving changes in traditional value chains across the industry, while 69% said that platforms were disrupting their organization’s own business and operating models.

But the adoption of platform business models is set to bring benefits to customers, as well as banking institutions as, according to 79% of banking executives surveyed, these models enable greater personalization of products and services, while 78% agree that platforms foster greater innovation of products and services.

Asked how platform business models will impact banks over the next three years, 90% identified an impact on revenues, followed by profitability at 86% and customer/stakeholder satisfaction at 83%.