Trust is the true currency of financial connectivity

Mit Shah is co-founder and COO of Method, a provider of financial connectivity and payment infrastructure.

Financial connectivity and data is the keystone of the fintech industry's potential, powering realtime, hyper-personalized digital experiences and driving a stepchange in financial services. 

The risks and rewards for builders in the financial technology industry when using customer data are both high. Consumers may feel they’ve lost control of their data amid a lack of comprehensive privacy regulations in the U.S. 

With connectivity to consumer financial data, a company can build an impactful new product and open up access to important financial services. That same connectivity, used the wrong way, can lead to a massive violation of consumer trust. Without a broader legislative framework, it puts a huge onus on each company to walk the right line. Fintechs need to be proper stewards of a consumer's information and put control and power into a consumer's hands. The end result isa product with real additive value that rewards the exchange of trust.

This means that fintechs need to balance priorities to be successful. They need to create magical experiences that feel personal and additive. They need to know each consumer’s preferences and deliver real value while also respecting privacy boundaries. With great consumer access comes great responsibility.

As financial connectivity expands, companies that succeed will be the ones that create clear consumer value while earning and maintaining trust. Here are a few basic principles to help navigate this line. 

1. Proposed regulation can be a signal, even if it’s not yet a fixed rule 

Data and privacy laws are narrow and patchy. But following the trajectory of proposed legislation can help you evolve with how the industry is thinking and get ahead of change. 

The most obvious example is the currently paused implementation of the CFPB’s (CFPB) Section 1033, often referred to as the "open banking" rule. 1033 sets clear expectations for account connectivity: companies need to have consumer consent to connect to their accounts and use their data. This consent must be time-capped and narrowly tailored to the product it’s being used for. 1033 hasn’t been rolled out yet, but has drawn enough focus that the industry is assessing how to make parts of this available already. 

2. Customer data should enhance your existing value proposition, it shouldn’t be your existing value proposition

A crucial first principle as you integrate direct customer connectivity into your product, is to focus on where you’re providing value and what data you need to strengthen that proposition. At a broad level, the promise of fintech is to improve access to types of financial products, and save consumers time and money. Whether the objective is to offer real-time liability data or embedded payments capabilities, you need to have a north star for your business. Is the information you’re pulling actually providing value that is central to what you do? 

3. The data you don’t show consumers, can be as important as the data that you do

When someone is applying for a balance transfer from one credit card to another, it’s a massive value add to pull in their up to date credit information into the application. That effect is spoiled if you show them the active balance of their student loan and mortgage. 

Proper data segmentation, with different pieces of data triggering different contextual workflows, is an important bedrock when building a new product. At Method we use the 80/20 rule – the idea that 80 percent of the value of something comes from 20 percent of the inputs – as a guiding principle to avoid overstepping. Consumers don’t need to see all of their information. They just need to see the information that is most relevant to them. 

4. Terms and conditions apply, even if they’re not read

A Deloitte study of 2,000 US consumers found that 91% skip the fine print completely. 

It’s estimated that the average terms and conditions document would take a consumer around 45 minutes to read. It’s an intimidating dynamic when you’re building a product that connects to a customer account and that consumer is not paying attention to what they’re agreeing to. You can do everything right and still catch a consumer on the back foot. Which is where intent and best practices come into play. If you’re following protocols and have a considered approach, this will help you trust your instincts through uncertainty.   

5. Trust the marketplace of information 

Regulation and data protections might be limited. The ultimate protection though, is that bad actions do stack up in the marketplace of information. Cutting corners or pushing through unpopular updates has a cost, whether that’s through negative app store reviews or complaints. It creates dual sided incentives. Consumers who do their research will quickly be able to separate the good products from the bad. Companies that have built up positive brand equity and trust with their customers aren’t going to want to risk it. 

Which all leads up to the question that supersedes all other considerations and concerns: even if you could push the line out, is it worth it? Trust is won slowly, but lost in a heartbeat.