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Banks and fintech are diving deep into the digital domain and leveraging the treasure chest of data to create better products and services for their customers. Today, modern finance institutions can do all sorts of things, including having personalized banners to reach customers with specific interests and offering customized solutions at the right time.
But, how banks and fintech in Saudi Arabia can address the challenges of personalization while managing customer data carefully.
It’s all about tying in data security with personalized and delightful banking experiences!
There is no silver bullet to cure all data privacy ailments. But, for financial institutions, an insights-led customer engagement platform compliant with privacy regulations is definitely the need of the hour.
The paradigm shift in generic communication has reduced credit processing and appraisals, or CPAs, by over 200 percent. That’s because the banking and finance sectors are today utilizing AI-based optical character recognition, or OCR, to verify uploaded documents (KYC) and process forms. This has ushered in an era of convenience for banks and customers alike. Other digital initiatives like AI-powered Chatbots are being used to enhance customer experience and reach underserved customer segments at optimal costs, in minimal time.
While digitalization pushes the boat out for banking and finance organizations to leverage data for enhanced customer delight, it is also incumbent upon them to keep the customers’ personal identifiable information, or PII, safe from breaches and security threats.
Given the recent spate of data breach incidents, it is an understatement to say that the sector has to be watchful of emergent threats. This includes mobility security threats, large-scale anti-fraud bypass, the prevalence of fraud-as-a-service, and frequent ATM hacks. The mobile landscape is particularly at risk with threats like mobile malware, third-party apps, unsecured Wi-Fi, and vulnerable user behavior.
New regulations in Saudi Arabia
Saudi Arabia recently published the Personal Data Protection Law, or PDPL, that stipulates data protection regulations for all companies to follow across the Kingdom. The PDPL grants individuals rights regarding their personal data, including the rights to access, rectification, and destruction/deletion. Additionally, it grants individuals the right to be informed, which requires processors to inform individuals as to the legal or practical justification and purpose for collecting their personal data.
Cost of a data breachA 2020 study by IBM Security showed that a single data breach in the financial sector can cost a company an average of $5.85 million. In 2021 alone, data breaches-led losses by fintech companies were estimated at $5.72 million. It is seen that the average breach goes unrecognized for more than nine months and the resulting fallout of adjusted banking records and stolen records necessitates exorbitant recovery costs.
The IBM report further pointed out that data breaches across the globe have increased 10 percent from 2020 to 2021, and the costs related to them have risen from $3.86 million to $4.24 million on an average.
But the good news is that groups that operate with a fully-deployed and mature tech stack can successfully identify and contain a data breach 27 percent more efficiently than those positioned in the primary stages of transformation. The cursor now points to the fact that cybersecurity must excel at preventing attacks in real-time, rather than repairing the damage.
It is time now to move into the ‘prevention is better than cure’ mode. And this precisely is the reason why governments across the world are taking proactive steps and imposing regulations like the EU’s General Data Protection Regulation, the toughest privacy and security law in the world. All organizations that target or collect data related to people in the EU have to fulfill these obligations. Similarly, governments in the Middle East have started enforcing stringent regulations on the processing and handling of customers’ PII by financial institutions in the region.
Customer engagement platform
It’s an uphill task for banks and fintech companies to factor in all the digital laws, but not an impossible one. Innovative and advanced customer engagement platforms that are compliant with data security and privacy regulations can help banks achieve customer delight. While at the same time they can adhere to the national data laws and regulations and comply with global and regional data privacy and security standards.
Accelerated by the pandemic, Middle East banks and fintech have started deepening their relationships with customers while ensuring the security of customer PII.
For example, in the region, Mashreq Bank, a privately owned bank, offers delightful digital banking experiences by analyzing customer behavior, understanding it, and personalizing communication. The bank has put in place a privacy policy that respects and addresses customer needs and explains what types of information the bank needs and how it will be used.
Customer delight and personalized service in banking are achieving meaningful engagement with customers and giving them robust data security and privacy. Banks are adopting AI-enabled insights-led customer engagement platforms to address these issues throughout a customer journey that ultimately yields profitable growth.
• Raviteja Dodda is the CEO & co-founder of MoEngage.