Solving the Encryption Conundrum in Financial Services

Woman using laptop in home office

Encryption debates have captured the world’s attention. And coupled with the inevitability of another notable data breach, awareness of encryption as a tool to mitigate threat is at an all-time high.

Encryption has gone mainstream. In 2016, WhatsApp announced that it would encrypt all users’ communications. While Apple stood their ground on encryption against the FBI. In one fell swoop, these two companies shifted the user base of strong encryption from what most believed to be whistleblowers and journalists to almost three billion people worldwide.

Meanwhile, government bodies are busy endeavoring to weaken strong encryption in the interest of national security as technology companies, opposed to such a precedent, are arguing that the privacy and the security of millions of innocent citizens would be at risk.

What does this mean for FS?

Despite being one of the first industries to embrace a digital transformation agenda, the financial services sector continues to struggle in the race to deploy digital technologies in order to grab a bigger “piece of cake.” As competition from new, digital-first financial start-ups continue to grow; banking executives are focused on game changing digital solutions, such as encryption, to compete successfully. If you want to talk to your customers, the security must be there. The better your security the closer you can be to your customers. In this article, we delve into the link between encryption investments to growth and customers.

Consider encryption a competitive differentiator

Consumerization of encryption is the driving force behind customer demand for secure digital communications, and as a result, increased expectations. The ease at which confidential information can be intercepted today has created hesitancy among consumers to send or receive private information unless encryption is applied, both during transit and at rest. Increasingly, banks or financial institutions not offering their banking customers a secure digital experience are regarded as disconnected and outdated.

Focus on customer experience as a digital business enabler

Digitizing and automating invoice processes are said to result in savings of 60-80 per cent compared to traditional paper-based processing. Some banks, including Standard Chartered, have set lofty goals to reduce their paper-based on-boarding from 90 per cent to 10 per cent. Standard Chartered is also expecting turnaround times to reduce from five days to less than an hour as a result of its investment in digitizing processes. By encrypting on-boarding customer communications, including mobile, financial organizations can move towards these cost- saving models securely. And as a result, offer a cleaner, faster enhanced customer experience.

Invest in compliance and risk management

The Cybercrime Directive and the recently-approved General Data Protection Regulation initiative have elevated the awareness of encryption technology. Under these rulings, banks and other financial institutions will be compelled to disclose when data security measures have been breached. They will also be required to justify the reasons for collecting specific customer data. Failure to comply, results in heavy financial penalties. Encryption can digitally protect sensitive data based on policies, minimizing the number one cause for data breaches, human error. Encrypting communications from the get-go is not only one way to avoid regulatory fines; it’s also an insurance policy for customers and business partners, building higher levels of trust. 

Moving forward. Why isn’t encryption ubiquitous? 

The financial services industry needs to dedicate the time and the resources to allocate against initiatives focused on securing digital communications. Encryption-enabled solutions have the potential to create entirely new ways of working with your customers and partners. And with 16 per cent of customers accounting for 105 per cent of profits, delivering differentiated services will be crucial to keeping the long-term brand loyalty of this trendsetting group.

The underlying implementations of smart encryption technologies are complex, but the user experience is becoming progressively transparent and seamless. WhatsApp secures our chat messages without us having to think about it. The same must happen in financial services with bank statements, mortgage applications and other confidential material. In fact, in a society that is demanding digital services in all occupations, it must to remain relevant and competitive. Today, with the rise of encryption, financial institutions are in a far better place to exceed their customers’ expectations by fostering trust and demonstrating a commitment to safeguarding privacy, while increasing revenue and productivity.

insert whitepaper

This whitepaper sets out some of the key rules, guidelines, best practices and associated risks and suggests ways that organizations can use email technology to protect themselves, their customers and representatives. In addition, it looks at some of the other issues that enterprises may encounter when enabling the email encryption technologies.

Updated March, 2021. This article originally appeared in Global Banking and Finance Review.

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