UK researchers are taking a deep dive on building digital trust in fintech

Because the world had to go predominantly cashless overnight when many digital trust issues had not been resolved.

The United Kingdom’s Newcastle University has partnered with the UK’s first bank built exclusively for smartphone or tablet—Atom bank to collaborate on a three-year project that will look at the role of machine learning in banking, particularly in the context of automated lending decisions and whether these lead to bias and financial exclusion.

Researchers will explore how to safeguard and use personal data in rebuilding consumer trust in banks and financial services. The term coined to refer to trust in fintech is ‘fintrust’.

One key output of the fintrust research is the ‘Ethical Toolkit’, which examines the caveats between social constructions of trust and how we can use AI and machine learning algorithms to produce trustworthy technology, through an app that offers ‘Fairness as a Service’.

In an exclusive chat with DigiconAsia, Dr Karen Elliott, Degree Programme Director for the Groningen Dual Award Programme and Senior Lecturer in Enterprise/Innovation (FinTech), Newcastle University Business School, shed light on the cashless economy and the need for trusted sources in financial transactions and digital transformation.

DigiconAsia: What kind of opportunity has the pandemic created for the innovators researching fintrust? 

Karen Elliott (KE): In the pandemic, organizations have essentially become their digital presence, and citizens have had little option but to engage with digital services. This has led innovators to promote the fact that technological solutions can be used safely and customers data is secure. Also, organizations are offering a plethora of digital solutions, services and products that citizens may not have engaged with in the past due to a lack of trust following the Global Financial Crisis of 2008.

For instance, socially, to build trust, customers first make themselves vulnerable to the new service hoping at first that the trustee (innovator/solution) will have the ability, benevolence and integrity to act in the best interests of said customers and their data. Subsequently, after repeated use of a service/product the customer base builds a positive perception that, as nothing negative has occurred in this digital process (either to them or their data), ‘trust’ starts to emerge.

Maintaining and sustaining this relationship is key for innovators to gain a foothold in the marketplace.

DigiconAsia: DX has been a savior during the pandemic. How far can it be a pillar if the users lose their trust amid the prevailing threats? 

KE: To a large extent, the pandemic has ‘forced’ entire countries to move towards a cashless society. The building of trust occurs over time and gradually a relationship between provider/customer is nurtured. However, loss of trust can occur rapidly: cyberattacks and the subsequent adequate and timely response (or lack of response) to an incident by the provider/innovator. 

For example, any time lag between an incident and informing the customers that their data may be involved increases the likelihood of mistrust occurring. Similarly, repair of trust must be authentic, and the provider/innovator should demonstrate in a transparent manner how customers can re-engage without undue risk to their data, money, etc. 

This sounds simple in practice, yet, once trust is broken, repair requires substantial time and effort, without guarantee of retaining the patronage of customers.

DigiconAsia: Can the growth of fintech exist in the post-pandemic world?

KE: Working with the UK’s National FinTech Network covering all regions of the UK, the indications are positive. Specifically, opportunities exist to address those who remained financially excluded during the pandemic, maybe due to the lack of technological access to the internet or devices. If we move to a cashless society, do we not have a corporate digital responsibility to address the digital divide?

Thus, our recent additional funding from the Bill & Melinda Gates Foundation deep dives into financial exclusion and this demonstrates an array of opportunities where fintech can have a purpose to assist the financially-excluded citizens in accessing such services. 

Some algorithms have been found to be biased and may exclude residents due to erroneous data and machine learning training. We are currently developing technology prototypes with resident inputs and use-cases in the UK/Internationally, and this will help ensure that all residents can be part of the digital economy/cashless society. By this token, multiple innovation opportunities will exist for fintech within and beyond the pandemic.

DigiconAsia: In these uncertain times, how can the players win customers’ trust?

KE: In a word, collaboration. In the UK, we see that if established brands in financial services such as traditional banks and building societies collaborate with fintech start-ups or scale-ups there are mutual benefits to the partners and residents. 

Likewise, universities are collaborating across industries and residents through proof-of-concepts in demonstrating new ways to produce interpretable and trustworthy technology. This is achieved through being transparent about the decisions underpinning the development of such technologies. 

However, a caveat that has emerged: ‘trust’ may not always be a driver of engagement. That is, ‘ease of use’ tends to be the first consideration, with the matter of trust coming into the equation only if the customer has a negative experience.

Therefore, as we are still in the infancy of exploring trust in terms of what is socially acceptable, legally permissible and engenders engagement with ‘players’ in the market, much work remains to be done. Trust is a moveable, socially-constructed and therefore fluid concept. It is subject to contexts and to the perceptions of customers, providers and also the transparency of processes and technological developments. Indeed, trust remains hard to define and it is complex.