In 2019 the Harvard Business Review published an article entitled “The Trust Crisis” that examines the issues of building and maintaining brand trust. It looks at some crises that beset various consumer-oriented companies from the years prior the article’s appearance and their fallout. Among the incidents mentioned were the Facebook’s data sharing disclosures from 2018, Volkswagen’s emissions testing fraud scandal of 2015, and missteps by United Airlines in 2017 and 2018.
Trust Has Value
According to the article, when companies are caught up in trust-damaging episodes, it hurts their financial strength. Citing a 2018 study of eight high-profile business scandals by The Economist, the article states “the median firm was worth 30% less than it would have been valued had it not experienced a scandal.” That’s real damage.
Harvard Business Review says the issue is rooted in the fundamental definition of trust in a business context, which is “our willingness to be vulnerable to the actions of others because we believe they have good intentions and will behave well toward us.” That means consumers take it on faith that a company will do the right thing and so are more inclined to purchase their products or services without a lot of due diligence.
As Harvard Business Review points out, the longstanding Ponemon Institute’s annual Cost of a Data Breach study includes quantifiable costs associated with loss of brand trust in its formula when calculating the financial impact when a security breach occurs. The global average for all industries in 2022 was $4.35 million (in the U.S. that figure jumps to $9.44M). In some sectors a breach—and the resulting breach of trust—is more costly. And as you’d expect, the two industries most affected are healthcare ($10.10M global average) and financial services ($5.97M global average).
Financial Services is a High Trust Industry
One of the reasons healthcare and financial services are hurt more by a breach is because they are highly regulated and so a breach tends to come with fines and penalties assessed by state and federal regulators, as well as higher legal costs associated with navigating such events. Another factor is the level of trust that is required when someone chooses a healthcare provider or financial services firm—and the harm involved when that trust is broken. In healthcare there may be a great deal of sensitive medical information involved. However, depending on where you live or what your needs are, you may not have many choices when selecting a doctor or medical practice. Financial services are a different story.
Most people have a lot of choices when it comes to banking, investments, and financial management. Local, regional, and national banks, credit unions, and electronic banks as well, each competing for business. If any earns a reputation for untrustworthiness it can be crippling. People and organizations are protective of their wealth and want to make sure they are working with a firm that is not going to be sloppy with their money.
A lot of data has to move to a lot of different places, internally and externally, for a bank to operate efficiently. Every cash transfer, credit or debit card transaction, and decision on credit involves the transfer of data. And there are many more behind-the-scenes data transfers and transactions that take place between partners, vendors, customers, regulators, and other organizations. Where banks and other financial services organizations are concerned, there is a vast and complex supply chain that must be managed, and each transfer of data must be secure if trust is to be maintained.
Trusted Data Ecosystems Require Secure File Transfers
McKinsey says, “An open-data ecosystem can function effectively only by achieving a level of well-founded trust among all the participants. Without this, market participants—whether individual consumers or businesses—may opt out. Financial data are particularly sensitive, and users are more likely to want to share data if they know what they are sharing and why that sharing is valuable to them. User trust is also encouraged when threats to cybersecurity are anticipated and mitigated. Breaches can occur during transfer of data, or at any institution involved in the open data ecosystem, such as a bank or fintech.”
Because we buy from brands we like and trust, and avoid those we distrust, investments in maintaining goodwill are valuable. Those investments may be in any area of financial services operations, including the tools and technologies used to conduct and secure data transactions. For sensitive file transfers, secure managed file transfer platforms are essential, and Coviant Software is proud that many financial services firms rely on the award-winning Diplomat MFT for those transactions.
You Can Trust Diplomat MFT
Diplomat MFT supports security standards and protocols like SFTP and OpenPGP to ensure both the files and data associated with the transaction are secured. And Diplomat MFT enables compliance with many of the larger banks’ own data transfer standards, like Citi Bank’s Citiconnect file transfer network and JP Morgan’s cryptographic requirements.
If you need to shore up your trusted financial file transfers, look into Diplomat MFT from Coviant Software. Many financial services firms already rely on us. And with our transparent, ethical pricing, you won’t have to worry about gaining a reputation for irresponsible spending, either. Schedule a demo today.