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Why trust is the new currency
Businesses need to engender trust with customers amid the complexity of digital transactions involving multiple third parties, even as consumers are not fully cognizant of the importance of data privacy
Trust underpins all from of economic activity. If, as a buyer, you do not trust that the seller will provide you with the level of quality you expect for the value you are paying, you are unlikely to be a customer.
If as a seller, you doubt the capacity of your customer to pay, you are unlikely to sell to them. I use the “unlikely” because in the background you are evaluating the risk involved in the transaction.
Think of the Hollywood movies where there is a big drug deal taking place. Everyone carries a gun because trust is low among this group, but having a gun helps (in your mind at least) to minimise the risk of the transaction not going as planned.
Bring that back home – if you buy a watch from a jeweller in a fancy shopping mall, the chances of it being fake are slim, but that same looking watch in a street market? You generally decide the risk is higher outside of the safe environment and buy where your risk is lower.
What about online? Would you buy something from Amazon, Apple, Alibaba? The chances are very high that you would as these “brands” are considered “trusted” and the chances of the transaction not working out the way you want would be low.
But what about their marketplaces? Not everyone realises that these trusted brands are unable to validate every seller and every product on their marketplace, and so believe their risk is lower regardless, because it is associated with a trusted brand.
This reminds me of a story a couple of years ago when some enterprising individuals created mobile apps and, whether through honesty or irony, labelled these apps as malware. Some 500,000 downloads later, it was removed by the trusted brand from their marketplace, but not before half a million people had not considered what they were doing.
So, do we need to concern ourselves with trust if consumers don’t? The answer, obviously, is yes, because that 500,000 people (or at least a large percentage of them) will not be more aware that the apps on these stores are not necessarily trustworthy, only the store is. And the stores generate significant revenues for these trusted brands.
The IDC 2020 CEO survey identified that the most important strategy for organisations heading into 2020 (and this was the early days of Covid-19) is to “engender trust with our customers”. Since we now need to conduct a huge part of our existence online, this means the cyber presence must be trustworthy – but how do we get there?
IDC has created a framework that captures the elements of trust as they apply to organisations and their ability to conduct business. The Digital Trust framework is anchored on two things – a strong understanding of risk, followed by robust IT security systems that can deliver on the compliance that is legislated, and serve as a foundation for addressing the issues of ethics and social responsibility, as well as the demands for privacy of individuals and data.
Risk must be the foundation. Without an understanding of what is as risk, the motivation to do anything about it is absent. In this case, losing customer data because it is not covered by the latest security technologies not only impacts the privacy concerns of customers, it also contravenes the compliance demands of many governments and legislative bodies.
In today’s business environment, this becomes even more critical – and risky – as most digital transactions today require collaboration across multiple entities. A supplier engages a third party to deliver the product to the buyer, who is using a third-party to gain recommendation or testimonials to validate the integrity of the seller who has engaged a third-party to ensure payment is received.
The payment gateway is a gateway that connects to multiple financial institutions that are part of the process. The buyer uses a credit card, and the credit card company needs to validate and deliver a one-time password, via a third party.
This is not the most elegant description, on purpose, as it belies the complexity that underpin all digital transactions today, all of which rely on trust across all parties to be completed.
None of this trust, however, would exist if the leadership of these organisations did not have the right moral and ethical standards and level of social responsibility to do the right thing, which separates leaders from the laggards when it comes to digital trust.
Just because consumers do not fully understand the importance of keeping their own data private does not mean organisations should not care about it. It is morally the right thing to do. Forget this, and you can forget the next generation as your potential customers.
It can take years and decades for businesses to build up trust and customer loyalty, and a matter of minutes for it all to be lost.
Simon Piff is vice-president for ICT practice at IDC Asia/Pacific.
Read more about security and digital trust in APAC
- Singapore, South Korea, Japan, Australia and New Zealand have the highest exposure to cyber risks, but they are also the most prepared to deal with cyber attacks, study finds.
- A senior Microsoft Asia executive talks up the company’s cloud momentum APAC, how it is leveraging its trust from customers as it expands its regional footprint.
- RSA’s CTO calls for governments to build trust with their people and ensure that no one can intentionally put bad data into their systems.
- ASEAN’s regulatory sandbox will provide businesses a safe test environment to provide digital services across the region while complying with data privacy rules.