A.T. Kearney Data Privacy Study Finds Significant Consumer Privacy Concerns Regarding Increasing Access to Personal and Transaction Data

96% of consumers have some concern about the privacy of their data. While data regulation ramps up globally, the U.S. regulatory outlook is unclear. Opportunity exists for a significant banking industry role.

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A.T. Kearney

Sep 14, 2017, 11:42 ET

NEW YORK, Sept. 14, 2017 /PRNewswire/ -- Global strategy and management consulting firm A.T. Kearney today announced the release of its Data Privacy study, a survey of more than 7,000 consumers that examines the nature of the difference between consumer sentiment toward data privacy and observed consumer payments and data-sharing behavior. The research study, "Consumer Data Privacy: Strategic Opportunities to Address Emerging Consumer Needs" finds that while digitally-active consumers overwhelmingly (96%) express being "somewhat" to "extremely" concerned about data collection and use, more than 75% engage in digital payment transactions at least once a month. As a result, a large portion of consumers are looking for stronger tools and controls to manage access and use of their personal and transaction data in digital commerce. Notes Bob Hedges, lead partner in A.T. Kearney's Financial Institutions practice, "In the wake of high-profile data breaches, we believe U.S. financial institutions have the strategic opportunity to play a unique role in consumer protection and data privacy, as consumers seek to be both protected as well as have their best interests served in the management of their personal and transaction information."

All indicators suggest that the level and intensity of consumer digital commerce engagement will continue to increase. And for those transacting online, consumers are increasingly using cards-on-file, both at individual retailers and third-party payment providers (e.g., PayPal, Visa Checkout) to conduct digital purchases. The incidence of card-on-file being the primary payment method for digital purchases grew from 38% in 2015 to 44% in 2016. Strikingly, among those who keep cards on files with retailers as primary payment method for digital purchases, 44% have already given their payment credentials to be held on file to more than five retailers.

In terms of consumer attitudes, a clear divide exists in the consumer market where 34% of consumers consider the use of their payment/purchase data to be "an invasion of privacy that should be prohibited," while a counter-balancing 36% of consumers can see some benefit from data sharing if appropriate consumer compensation is rewarded. These two groups of consumers have strongly distinctive points of view.

Consumer research further suggests that (1) the monitoring and reporting of data use by third parties, (2) usage-based compensation schemes to reward consumers, and (3) clear industry protocols and standards around usage and data-sharing are all of real interest to consumers.

Importantly, against this backdrop, banks are viewed as the payments and digital commerce provider most prepared to act in consumers' best interest. Among consumers who engage in digital commerce and are prepared to share their data, 65% of consumers rated their primary bank as a provider with whom they were comfortable sharing personal information. Banks' high rating compared very favorably to lower consumer ratings for Amazon (34%), Apple (22%), Google (17%), and large national retailers (10%).

Globally—most notably in the UK, Europe and Australia—regulators have been pushing for greater control over data collection and sharing practices by banks and tech firms. While evolving U.S. consumer attitudes could lead U.S. policy down a similar path to the UK, Europe, and Australia, in the absence of regulation, the banking industry could provide sought-after leadership to develop standards, protocols, and service offerings to address this increasingly important consumer issue.

Notes Bob Hedges, lead partner in A.T. Kearney's global financial services practice, and co-author of the study, "This work, originally undertaken in response to the CFPB proposal around data aggregation and consumer data sharing practices, spotlights the opportunity that the banking industry has to address this critical consumer issue. Our research shows that a significant majority of U.S. consumers have serious concerns about the privacy of their data. A level of frustration exists over the inability to act on their concerns. With growing consumer interest in this issue, there is the need to both have the service solutions and the public policy in place that will help protect consumer data, while allowing consumers to share it in ways they want to."

The study points to the opportunity for banks to assume leadership on the data privacy issue by offering "privacy as a service" as well as taking an active role in shaping public policy in ways that protect consumers' data rights. Bob Hedges forecasts, "A significant marketplace opportunity is available to be capitalized on by banks in operationalizing consumer interests and advocating on their behalf in the complex world of digital data and digital marketing. The financial services industry can and should seek to play a central role in establishing consumers data rights and facilitating the controlled sharing of data."

2017 A.T. Kearney Consumer Data Privacy Study
The A.T. Kearney Consumer Data Privacy Study was conducted with a nationally representative sample of more than 7,000 U.S. banked consumers at least 18 years of age. Banked consumers are those who have a checking and/or savings account with a financial services provider. The survey was conducted in Q4 2016 with an online panel.

About A.T. Kearney
A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission critical issues. For more information, visit https://www.atkearney.com.

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