In the ever-evolving landscape of technology, the Internet of Things (IoT) has emerged as a transformative force, promising to revolutionize our daily lives by connecting devices and enabling seamless automation. However, this promising technology is facing a significant challenge when it comes to consumer trust.
In the results of our recent ‘Circles of Trust’ survey, the gap in trust between financial institutions (FIs) and IoT technology was striking. So, let’s explore the lessons that the IoT industry can learn from the financial services sector to build and nurture consumer trust.
Outlining the trust divide: IoT vs. finance
To shed light on the glaring disparities in trust levels between IoT technology and FIs, at the heart of this divide lies a fundamental lack of understanding about IoT. Only 23 percent of global respondents feel confident enough to define the term. In stark contrast, 64 percent of respondents expressed some level of trust in their banks, soaring to an impressive 72 percent in the UK.
However, it’s not just a matter of trust; it’s also about ‘fear’. The survey reveals that 57 percent of respondents worldwide are concerned about the security of their smart home devices, a figure that spikes to a concerning 69 percent in Mexico. What’s clear is that apprehension is not without merit: we are seeing that IoT-related hacks are a growing threat, with common malware being updated to target IoT devices and even smart fridges vulnerable to intrusion.
Perhaps the most surprising revelation is that 26 percent of respondents claimed to have been affected by IoT security breaches. This statistic may seem unusually high when compared to the 22 percent who reported theft from their bank accounts, but this shouldn’t be enough to explain such a significant difference in trust. So, what factors contribute to this pronounced trust gap between two seemingly unrelated industries?
Visible vs. invisible security
The first and most obvious difference is regulation. While IoT is a relatively recent industry, banking has existed for hundreds of years. Major parts of every country’s government deal with banking regulations, with international agencies like the Basel Committee on Banking Supervision (BCBS) and the EU’s Basel 3 responsible for the complicated matters of international finance. Even though most people will not need to know the ins-and-outs of these regulations, we all know that there are government bodies who want to keep people safe.
One critical difference between the finance and IoT sectors lies in the visibility of security measures. In finance, security systems are highly visible to consumers. You receive alerts for suspicious transactions, use two-factor authentication and can physically visit a bank branch for assistance. These tangible security measures provide a sense of control and transparency to consumers, fostering trust.
In contrast, IoT security often operates in the background, hidden from the end user. When your smart doorbell or TV receives an update, it typically happens automatically and without much information on how these updates impact security. This inherent invisibility creates a sense of vulnerability and disconnect from the security measures in place.
To bridge the trust gap, the IoT industry must take a page out of the financial services playbook and make security more visible and understandable to consumers. It starts with actioning some key strategies:
Transparent Communication: FIs excel in communicating security measures to their customers. Whether it’s sending email alerts for account activity or providing detailed explanations of security protocols, they keep consumers informed and, more importantly, an active part of the security process. IoT companies need to adopt similar practices. They should communicate openly about security features, provide regular updates on vulnerabilities and patches, and offer accessible customer support channels for security-related concerns.
Education and Empowerment: The finance industry educates consumers about best practices for secure banking. Similarly, the IoT sector should invest in educating users about safe IoT device usage. This includes guiding consumers on setting strong passwords, enabling multi-factor authentication, and explaining the importance of regular device updates. Empowered users are more likely to trust in the security of their IoT devices.
Accountability and Liability: FIs understand the importance of holding themselves accountable for security breaches. They are legally obligated to reimburse customers for unauthorized transactions, instilling a sense of confidence. IoT companies should consider similar policies that hold them accountable for security lapses and provide compensation or assistance to affected customers.
Collaboration and Standards: Financial services operate within a well-established framework of regulatory standards and industry best practices. The IoT industry should work toward establishing similar standards and certifications for device security. Collaborating with experts, regulatory bodies and industry peers can help create a more secure IoT ecosystem.
Realizing the potential
The trust deficit between the IoT industry and the financial services sector is a clear signal that the former needs to take proactive steps to improve consumer confidence in its products. While the challenges of securing interconnected devices are undeniable, it’s the visibility and communication of security measures that set these industries apart.
By adopting strategies from the world of finance, such as transparent communication, education, accountability and collaboration, the IoT industry can bridge the trust gap. Consumers need to feel that they are not only using smart devices but are actively engaged in securing them. As we move further into the IoT era, building consumer trust will be pivotal in realizing the technology’s full potential and ensuring a safer and more connected future.