In today’s data-driven world, the banking industry relies too heavily on legacy data privacy-enhancing technologies. This reliance, together with the restrictions on financial data usage imposed by regulation, is inhibiting data-driven innovation across the industry. These are just some of the strategic insights conveyed in a new research report launched today by Mobey Forum’s AI & Data Privacy Expert Group.
The new report entitled ‘The Digital Banking Blindspot: Emerging Privacy Enhancing Technologies’, explores how a new breed of emerging privacy enhancing technologies (PETs) can be used to mitigate risk and enable business innovation. It also argues that a ‘privacy blind-spot’ is becoming increasingly critical in today’s financial services climate, where organisations are constantly challenged to balance innovation without compromising how sensitive data is stored or shared.
“Banks face many obstacles when taking a data-driven approach to innovation,” says Amir Tabakovic, CEO and founder, Experiens.ai, and AI & Data Privacy Expert Group Co-chair. “Widely adopted legacy privacy technologies are now failing and increasing privacy-related risks. This can quickly become a complex topic, with issues being impacted by legal, business and technology factors. Understanding the underlying problems can be difficult and, thanks to rapidly changing privacy landscape, many legacy solutions can no longer be applied to today’s challenges. The net result is the stalling of both internal innovation and the creation of multi-stakeholder ecosystem use-cases. This is the current blind spot.”
The report highlights a new breed of emerging PETs that create potential for financial service organisations to both significantly reduce existing privacy risks and allow the implementation of privacy-by-design principles. “Emerging PETs are bringing forward new approaches to fill the void and clear the path to innovation. The speed at which banks can adopt these new approaches will determine their capacity to get ahead of the game in data-driven innovation,” adds Tabakovic.
The Report stresses that if the industry can adopt a strategic approach to PETs, its key institutions may finally escape the privacy vs value creation dilemma, in which privacy protection occurs at the expense of innovation (and vice versa).
Ville Sointu, Head of Emerging Technologies, Nordea and AI & Data Privacy Expert Group Co-chair, comments: “The digital banking industry is walking a fine-line between consumer protection and collaborative innovation. Across the board, financial institutions must find a way to create new value out of data without compromising privacy. A new approach is required, one that enables emerging privacy enhancing technologies to solve some of the key challenges in this space, such as how to process anonymous and encrypted data without losing value, even when no details about private data is shared.”
Elina Mattila, Executive Director of Mobey Forum, commented, “Mobey Forum exists to enable precisely these kinds of problems to be shared, analysed and, ultimately, overcome in a commercially neutral setting. Our goal is to empower banks and financial institutions to better shape the future of digital financial services. AI and data privacy are currently pivotal issues within banks. If they are to successfully develop their own AI-driven processes, products and services, it is vital that they adopt a strategic approach to overcoming today’s regulatory challenges.”
Mobey Forum’s AI and Data Privacy Expert Group was formed in March 2020 to address how banks and other financial institutions can strike the balance between data privacy, security and innovation in the age of Artificial Intelligence (AI). This report is the first in a two-part series. The second part is anticipated later in 2021 and will take a deeper dive into the different PETs, their variable stages of maturity, and their potential to solve some of the most urgent privacy risks that banks face today.