The challenge this Data Protection Day: Can banks protect both data and CX?
James Doherty explains how banks and fintechs can balance security and convenience to protect both customer data and experiences
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Every year on January 28, Data Protection Day prompts the financial services and fintech sectors to showcase their investments in safeguarding sensitive customer information.
Yet, as financial fraud becomes increasingly sophisticated, balancing security with seamless digital experiences is an escalating challenge, especially in regions with stringent regulations like Europe.
In Europe, compliance with frameworks like GDPR demands a meticulous approach to data privacy and security, forcing banks and fintechs to carefully balance innovation with regulatory adherence. But this raises a crucial question: how can financial institutions protect customer data while delivering the intuitive, efficient digital experiences consumers expect?
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Security: The backbone of trust
While enhancing customer experience (CX) is vital, security remains the foundation of trust in financial services. Verification processes, such as two-factor authentication (2FA), are indispensable, but they must not frustrate users with delays or complexity.
SMS is still the most common method for sending one-time passwords (OTPs) and 2FA, reaching around five billion people worldwide. It's effective – more than 90 percent of SMS messages get read, according to Sinch research. But in the context of fraud, financial institutions have to ensure SMS is used in the safest way possible.
The most secure SMS experience minimizes the number of intermediaries between the core banking platform and the customer. Financial institutions should partner with providers who have direct operator connections, ensuring the SMS delivery path is secure and predictable. This not only reduces fraud risks, but also ensures faster delivery from the bank to the customer.
SenderID protection is also key, as it ensures that when customers receive a text, they can trust it genuinely comes from their bank. By registering and safeguarding message headers, SenderID helps stop scams like smishing and spoofing before they happen. Combined with strong security certifications, financial services providers can show customers they are serious about protecting their data.
Is RCS more secure for customer communications?
In an era where customers manage their finances across countless apps and platforms, secure and versatile communication has never been more important. Enter Rich Communication Services (RCS) – a next-generation messaging protocol designed with encryption at its core, ensuring secure interactions between businesses and their customers.
RCS combines the simplicity of SMS with the interactivity of apps, offering branded notifications, interactive carousels, videos and chatbot functionality all within a customer’s messaging inbox.
Consider a loan application process: instead of impersonal workflows, banks can introduce interactive tools that guide users step-by-step with engaging visuals, chatbots, or tailored messages. A customer should be able to get personalized offers, ask questions and receive real-time updates on the channel of their choice.
But what really sets RCS apart is its stringent security standards. Each sender must be approved by both Google and the network operators, ensuring only trusted businesses can communicate via the encrypted channel. For banks, this means fraud alerts can go beyond plain text, offering branded, secure messages that reinforce trust and authenticity.
Momentum for RCS continues to grow, with major carriers such as Virgin Media O2 and Three UK supporting the platform. Apple's recent decision to adopt RCS further strengthens its position, unlocking secure communication for millions of iPhone users.
Seamlessly secure communication
The proliferation of communication channels brings both opportunities and challenges. While more ways to engage customers exist, they can lead to siloed operations, inefficiencies and fragmented customer experiences.
The solution? An omnichannel approach that prioritizes both consistency and security.
By unifying messaging across SMS, RCS, email, WhatsApp and more, banks can deliver seamless customer journeys while tailoring communication to the security needs of each channel. For instance, sensitive loan offers might be best delivered via highly secure channels like encrypted email or RCS, while non-sensitive updates can flow through SMS or app notifications.
This cohesive strategy not only boosts operational efficiency and strengthens customer relationships through tailored, seamless interactions but also ensures that communications meet the highest standards of data protection. Ultimately, the goal is to match communication channels to their use cases, all while striking the right balance between customer convenience and regulatory compliance.
Data compliance in finance
Every CX innovation must respect data protection laws. Regulations like GDPR demand explicit opt-ins for specific channels and offer customers the right to opt-out at any time. To maintain trust, these processes must be transparent and user-friendly.
Partnering with experts can help financial institutions navigate compliance challenges while focusing on customer experience. It’s not just about regulatory box-ticking; it’s about building lasting relationships grounded in trust.
Overcoming the challenges in data protection
By embracing two-way communication, prioritizing security, exploring new channels and adopting an omnichannel approach, financial institutions can achieve both goals without compromise.
On this Data Protection Day, the challenge remains: can banks protect customer data while delivering exceptional digital experiences? The answer lies in repositioning data security as a driver of trust and innovation that enhances the customer journey.
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