Handshakes have been a sign of trust for centuries. But how does that translate to the digital world, where building trust through computers and mobile devices can be more difficult?
As people’s lives increasingly shift online, digital trust has become the key ingredient to successful business models. Some aspects of digital trust are legally required, some rely on robust technology and others derive from organizations conveying their ethical standards.
“But most importantly,” according to a 2021 Harvard Business Review report, “any economy’s trust-building interventions — at both the institutional and individual level — must be proactive, forward-looking, and fine-tuned to the unique behaviors, attitudes, experiences, and environment of its digital ecosystem.”
Establishing digital trust creates confidence that online interactions and transactions are safe. Organizations build that trust by reassuring people the business is real and handles financial and personal information securely, reliably and ethically.
Legal obligations for digital trust
For some transactional relationships, strict legal requirements to Know Your Customer (KYC) govern financial institutions and other regulated industries. They need to perform due diligence to ensure the people they do business with are who they say they are. Other regions require KYC if transactions cross a threshold.
Under other legal requirements, such as the EU’s General Data Protection Regulation and the California Consumer Privacy Act, organizations must have policies and procedures for collecting and using personally identifiable information (PII data). Some industries also have requirements around using health or credit information.
Digital trust in those cases is mandated. The information is so important that governments have created penalties around its misuse. It’s a safe bet there will be more laws and regulations enforcing best practices as innovations continue to transform the digital environment.
Organizations lacking smart data security, privacy and responsibility measures can find themselves constantly scrambling to meet compliance and minimum standards. Those that understand the importance of trust in a digital world can build a competitive advantage.
PwC’s 2022 Consumer Intelligence Series Survey on Trust underscored the effects of building trust. The survey found that 71% of consumers are unlikely to buy if a company loses their trust.
Technical considerations for building trust online
Trust in the digital age is not simply between two parties. There are myriad connected devices, algorithms, data collections, third parties, cross-border transfers and innovations such as artificial intelligence, autonomous organizations and digital twins that require trust.
There are entire supply chains of interconnections that are potential sources of errors, leaks, misuse, inaccuracies, breaches and points of failure. Verifying and authenticating people and machines along the entire trust chain is imperative to protecting data, businesses and customers.
A 2022 World Economic Forum report supported the importance of identity verification, calling identity a core component of building digital trust. Beyond identity verification, organizations can build trust in multiple ways, including:
- Data audits
Know what information is collected and how to use, share and delete it
- Data life cycle management
Create a strategic plan around handling data
- Security expertise
Have the staff or outside expertise to analyze, deploy and adjust trust programs
- Ongoing education
Understand security risks and have consistent training for all employees
- Control systems
Install automation rules and transparency models to help ensure proper access and use
- Customer due diligence
Understand any potential threats posed by customers
- Ongoing monitoring
Implement procedures to spot suspicious activity
Establishing responsibility, reliability and respect
Establishing trust as a core value, from the board to all employees, can be a valuable differentiator. Implementing effective trust frameworks now will help establish an organization as forward-thinking, responsible and a worthy partner.
Networks of employees, customers, suppliers and vendors rely on an organization to deliver trust, and any breach hinders operations and limits opportunity. Almost every business decision can be viewed through the trust lens.
Meeting the needs for digital trust
A 2020 Trulioo Consumer Account Opening Report found that consumers consider security to be the top factor in an optimal account creation process. In general, without offering trust, businesses risk losing potential customers to other providers.
Offering trust extends to how companies select their vendors. Price and performance are important, but finding trusted vendors is also crucial. A 2019 Accenture report found that “if all companies collaborate to impose high standards on partner organizations, businesses can expect to save up to US$2.6 trillion.”
Meeting customer expectations and regulatory requirements for digital trust can help organizations drive business, minimize risk and build a safer world.
This post was originally published on Sept. 3, 2020. It has been updated to reflect the latest industry developments and best practices.