Thanks to transformative technologies like fintech, blockchain, and AI, the transition to a cashless society, where transactions are conducted in a digital environment, is accelerating, and our interaction with money has completely changed over the past 20 years. In his book "Digital Bank," Chris Skinner explains the impact of digital transformation in the financial sector with concrete examples, and he emphasizes that the element of trust is decisive in the channel preferences of bank customers. The book points out that although customers have the opportunity to use online banking services, they may still prefer to visit physical bank branches. The main reason for this is explained as people choosing channels they find more trustworthy. Based on this, in an era where business processes are almost entirely digitalized, no one can deny that the concept of trust needs to be redefined and rebuilt according to the requirements of the time.
None of us want to establish and maintain a relationship with someone we don't trust. Digital trust reflects this fundamental need in the digital realm. According to ISACA's State of Digital Trust 2024 report, 87% of participants stated that digital trust is extremely important for the success of their organizations.
What Should We Understand About Digital Trust?
The World Economic Forum (WEF) defines digital trust as a set of principles, processes and technologies that enable all stakeholders in the digital economy to operate securely and responsibly online. ISACA, on the other hand, defines it as trust in the entirety of relationships, interactions, and transactions among all stakeholders in the digital ecosystem. Furthermore, ISACA has taken the concept a step further by earlier this year introducing the Digital Trust Ecosystem Framework (DTEF), which outlines an approach for how organizations can establish a structure that aligns with the definition of digital trust.
When we examine the DTEF, we see that digital trust is based on several interrelated elements: integrity, accessibility, sustainability, cybersecurity and data protection, quality, transparency, honesty, etc. Now, let's consider a crypto asset service provider. In this sector, even a few seconds of transaction delay can cause unnecessary concern for customers and, along with it, a loss of trust in the company. Now, let's take the banking sector. As we all know, the mobile banking applications of any bank must meet the expectations of their customers and be accessible 24/7, 365 days a year. But that's not enough. When a problem occurs, customers expect their companies to act responsibly and provide timely and accurate information about the issue. Otherwise, significant loss of trust could occur once again.
Additionally, customers want the bank they receive services from to have the flexibility to overcome major crises and continue to provide services. Effective business continuity plans are necessary for this, whether in natural disasters, economic crises or successful cyberattacks. This is also one of the important components of trust. Let's not forget that each of these components affects the others.
What Does Digital Trust Mean from a Corporate Perspective?
Different business units and assurance functions within organizations strive to manage this complex environment in a way that supports the company's success. However, a significant problem arises here. Do the units have proper task distribution and communication among themselves? For example, how effective can a corporate risk management structure that is unaware of the state of cybersecurity activities be in managing the company's risks? Or, how successful can an organization with a weak ethical culture be in protecting its information assets?
We know that a failure in any digital transaction or interaction will lead to questioning other interactions in the minds of customers and cause trust erosion. The company's brand, built with endless effort and labor, and the trust associated with it, can be destroyed by a single mistake, as numerous organizations have learned the hard way in this era of data breaches and privacy violations. Acccording to ISACA’s State of Digital Trust 2024 report, companies with low digital trust have a 67% risk of reputational damage, a 63% risk of data breaches and a 44% risk of revenue loss. These results show that organizations in an inadequate digital trust ecosystem need to take precautions.
By prioritizing digital trust for themselves and their stakeholders, financial sector organizations can establish stronger relationships with customers, foster innovation and ensure long-term success in the ever-changing digital world. It's not too late to assess your situation using ISACA's practical DTEF and take measures to enhance your digital trust environment.
