How Directors can ensure trust in digital services

Wednesday, 01 July 2020

Paul Kofman GAICD  photo
Paul Kofman GAICD
A Matter of Trust – The Practice of Ethics in Finance

    With COVID-19 rapidly fast-tracking our digital transition, Paul Kofman GAICD, Dean of the Faculty of Business and Economics at The University of Melbourne and Clare Payne, EY Fellow for Trust and Ethics and Honorary Fellow at The University of Melbourne, consider the trust and ethical implications of this accelerated shift to digital technology.

    Growing trust in difficult times

    Trust can seem fickle. It can take years to establish yet can be lost overnight. We see reputations grow and crumble. We know that establishing trust is at the core of productive and efficient relationships. The absence of trust requires costly surveillance, regulation and even legislation. As a result, distrust can diminish economic prosperity and welfare. Add to this the adverse impact on mental and social wellbeing, and distrust is costly in many ways.

    We consider ethical behaviour as the barometer of trust. While there can be short-lived trust without ethics, ethical behaviour inspires long-lived trust - and this is never more needed than in difficult uncertain times.

    We have seen trust shifts during COVID-19. Initially, trust in government increased and trust in business declined. Now it would appear society is casting a critical eye over all those in power, be it the government, media or their employer.

    The trust implications of digital technology

    A striking feature of COVID-19 impact has been the rapid adoption of digital technology, particularly in financial services, but equally in retail, education and health. Bank notes went out and tap-and-go came in, internet shopping boomed while retail doors remained closed. Blended learning flourished while traditional lecture halls were empty. Digital disruption has, of course, been a long time coming, but the pandemic dramatically fast-tracked our transition. Therefore, now is the time to consider the trust and ethical implications.

    Digital technology offers the promise of ethical outcomes such as increased inclusion and product suitability. However, many customers have traditionally been sceptical of new services. Consider for example, the loyalty expressed in very low switching probability to other providers and services in mortgages or superannuation, even when there is a clear financial imperative. Yet, trust in many new digital services appears to be remarkably high. User friendliness, control of one’s own affairs, and the perceived absence of conflict of interest, are powerful incentives for the public to place their trust in digital service - but is the trust deserved? We rely on a ‘conditions-of-use’ click, without recourse to a person who works in a physical premise where we can go to ask questions or complain. Do we do this because we trust the technology, or because we don’t have the time to think more deeply about the risks and ask critical questions so that we can make good decisions?

    The ethics of the matter

    There are ethical concerns relating to trust in digital technology that boards should be considering.

    First, how can we be sure that digital technology delivers fair, inclusive and equitable outcomes? We know that biases (cognitive, cultural, historical, etc.) are routinely embedded in digital source code. ‘De-biasing’ digital services is a big challenge and should remain of prime concern until we are confident we have the right systems and checks in place.

    Second, digital technology may drive unwanted behaviours such as binge shopping or excessive risk taking, such as online gambling. Whereas financial literacy has been advocated for decades, attention should be turned to ensuring digital literacy is included as well, across all age groups.

    And thirdly, privacy and security concerns will continue to surface and organistions must be adaptive in responding as they arise. Many expressed their concern with the COVIDsafe App even though the same issues are present with other apps, such as ride sharing and social media. When the overall benefits seem to outweigh the concerns, individuals may ‘surrender’ their trust and hope for the best rather than entering a relationship of trust and confidence. Boards should be aware of what trust relationships they have with their workforce and customers.

    The trust markers

    To navigate the potential concerns, we should rely on some of the key markers of trust: competence, best interests, transparency and care. If we want trust to last, we will need to reinforce these pillars of trust. This will require an investment in education to increase literacy, raising the bar of knowledge. In particular, this knowledge should be framed in an ethical context – asking what is fair and right. It will also require meaningful standards of ethical behaviour. Providers should exemplify best interests – beyond financial - as the standard of duty and care. And treat transparency as a friend. If we have learnt anything from our political and public health leaders, honesty matters. If we look after these trust markers, digital finance may well deliver on its ethical promise.

    Paul Kofman GAICD, Sidney Myer Chair of Commerce and Dean Faculty of Business and Economics, The University of Melbourne and Clare Payne, EY Fellow for Trust and Ethics and Honorary Fellow, The University of Melbourne.

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