Security

Banking privacy: 5 benefits for banks, customers

Banking privacy is a huge issue for customers. Here are five ways to improve it.

Photo: Adobe Stock

July 26, 2024 by Robert Ramsey — CEO, Rain Technology

When we shop, dine or withdraw cash, our personal and financial information is often displayed on public screens that we, as consumers, have no control over. While these types of interactions are commonplace, they can still leave us feeling concerned about our banking privacy and security.

Organizations like the Payment Card Industry Security Standards Council have established industry standards aimed at balancing the needs of merchants with consumer data protection. However, merchants and their hardware and software providers are still responsible for investing in areas like cybersecurity and data privacy in physical spaces.

Fortunately, protecting banking privacy is not only right for consumers but also highly valuable for banks and merchants and retailers who interact with customer financial data.

Here are five key benefits of investing in rigorous privacy measures on everything from a business's reputation to its customer loyalty, bottom line, regulatory compliance and more.

1. Banking privacy standards boost trust, confidence

Perhaps most importantly, safeguarding data privacy fosters trust and confidence in customers, which improves the overall banking experience.

When customers trust a business, they're more likely to continue buying its products or engaging with it. In fact, a study conducted by Edelman found 67% of customers must trust a brand before continuing to buy its products. Having a reputation for respecting customer privacy can serve as a competitive advantage, differentiating a brand in the broader marketplace and attracting discerning consumers who prioritize data security in their purchasing decisions.

Repeat positive engagement is also a cornerstone of building brand loyalty and expanding upsell and cross-sell opportunities, which can lead to increased conversions and even revenue. In the context of a retail experience, this could be driving a new credit card signup; at a bank, this could be enrolling in a new financial product at a service point kiosk.

Considering the fact that there are over 10 billion cash ATM transactions every year in the U.S., banks and merchants are faced with an enormous security challenge as well as an opportunity to build loyalty with customers.

2. Improving the customer journey

Building customer trust via enhanced banking privacy protection is not only important in the context of transactions but also other types of branch and retail interactions. Since COVID-19, there has been a significant increase in the adoption of self-service kiosks along with contactless ATMs across all types of retail businesses, with that market expected to reach over $63 billion by 2027 at a compounded annual growth rate of 9.4%

Furthermore, there's consumer demand: In one study, 73% of customers indicated a preference for interactive/self-service kiosks. Whether it's a fast-food restaurant, retail ATMs or theme park, customers may have a number of reasons why they do not want to share their intentions, preferences or spending amounts with others who just happen to be in their environment at the same time.

Responding to customer's banking privacy concerns in these vulnerable moments can help support a better bank customer experience strategy by nurturing an ongoing relationship.

3. Protecting your customers' physical well-being

In some settings, such as banks, having personal information exposed to unwanted eyes can amplify the risk of physical harm and pose a direct threat to personal safety.

While ATM security may be the most obvious, information such as a hotel room number or parking spot can make it easy for criminals to locate or track customers.

But how can merchants avoid undermining the physical safety of their customers? The answer is simple: They need to pay more attention not only to what information is being shared on screens such as kiosks and ATMs but also where and how. Customers should feel safe and fully at ease when interacting with screens, and technologies such as switchable privacy screens can help protect their safety in vulnerable physical environments.

4. Mitigating the risk of data breaches

Fraud and information theft can be devastating to both consumers and merchants. For consumers, it can lead to direct financial loss, identity theft, or credit report changes. For banks and merchants, it can lead to negative media exposure that tarnishes brand perception or even leads to direct financial losses.

In the U.S., identity theft alone accounted for over $10 billion of losses in 2023 and is expected to grow at 14% annually. With this rapid proliferation of visual and cyber hacking threats, it has never been more urgent for businesses to prioritize security measures that prevent unauthorized access to sensitive customer information.

While implementing robust encryption protocols and regularly updating banking security systems are key strategies to help thwart potential cyberattacks and safeguard customer data, there are also easy improvements to the physical environment that can have an immediate and meaningful impact on privacy. This includes installing cameras or, more recently, using switchable privacy display features within ATM or kiosk screens themselves to limit the exposure of sensitive information.

5. Supporting regulatory compliance

In addition to the potential business benefits that come with privacy improvements, organizations also need to consider regulatory compliance, especially if they operate globally. According to the United Nations, data privacy is a fundamental human right, and it is also an important topic in an environmental, social, and governance context, an area of increased investment for companies aiming to excel financially as well as maintain the highest standards of engagement with their employees, customers and suppliers.

Both the U.S. and EU have demonstrated an evolving focus on all aspects of consumer privacy, whether it is the e-privacy laws under GDPR or the California Consumer Privacy Act. The European Payments Council has already standardized privacy protection measures in the retail environment, such as requiring privacy shielding for PIN entry to prevent "shoulder surfing." In the U.S., PCI standards dictate similar requirements.

In other areas of European regulation, we have seen the proposed adoption of display technology standards, such as regulating no distraction from a passenger built-in entertainment display for the driver of an automobile (i.e., to what degree and when the images should be blocked from reaching the driver from a passenger entertainment screen).

In addition to these broad regulations related to consumer privacy, some industries — like healthcare — have even more stringent standards. For example, there are thousands of screens showing private information at every hospital in the world, from monitors showing patient data to the screens on medical devices themselves. HIPAA states "reasonable effort" must be taken to ensure patient confidentiality. Failure to comply with any of these regulations can result in significant financial penalties and damage to a company or hospital's reputation.

Lastly, businesses at the forefront of privacy can help set the standards in their respective industries and turn a potential future compliance issue into a strategic differentiator today. Put another way, as regulators begin to explore and understand available and emerging technologies, they will ideally take these capabilities into account when crafting new legislation or standards.

Final thoughts

Ultimately, protecting banking customers' privacy as they interact with an expanding variety of screen experiences is not only ethically imperative but also beneficial to both customers and businesses.

Looking at other industries, by prioritizing privacy, businesses can foster trust and loyalty, improve the customer experience, protect safety, mitigate the risk of data breaches, and ensure regulatory compliance — a win-win proposition that promotes a more secure, transparent and mutually beneficial relationship between businesses and their customers.

About Robert Ramsey

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Dr. Robert Ramsey, chief executive officer, leads Rain Technology operations, including customer project relations and technical team management. Prior to joining Rain, he was a research scientist at Agile Photonics, a co-founded venture with research thrusts in nanophotonic display technologies, novel nanolithography methods, and IR quantum dot lasing devices. He holds a BS in physics, BS in electrical engineering, and Ph.D. in applied physics from the University of Texas. Visit Rain Technology at www.raintechnology.com.

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