How privacy can act as a gateway to building consumer trust

There is growing consciousness among users about their privacy.

By Pooja Haldea

‘Data is the new oil’ is a phrase often used when discussing new business models. Our daily lives are impacted by how data is utilised. There are several risks involved in acceding access to our private data, as governments and corporations alike are keen to capitalise on data caches to expand digital inclusion and the data economy. This tremendous growth in use of data to solve problems and issues like contact tracing or ban of security violating apps have brought the privacy debate centerstage. There is growing consciousness among users about their privacy. Some forward looking mega brands have identified this shift in its nascent stage and taken steps to bolster their privacy practices to in turn signal user centricity.

Businesses are now seeing ethical data usage practice as a way to increase trustworthiness and build their reputation. Research has shown that users share more personal information with businesses that are more transparent about their data usage practices. Further to this, several companies are now actively engaged in public policy debates over data privacy, so as to appear as establishments that prioritise privacy over other interests, while simultaneously trying to balance their business needs. WhatsApp’s business strategy to build a narrative around end-to-end encryption and their global brand campaign’s focus on user privacy is a case in point. While questions remain about the security of the application, the renewed push towards privacy only strengthens the notion that users are seeking credible options to safely share their data. Even Apple’s messaging is focused on privacy vis-à-vis its COVID related ‘Exposure Notification Application Programming Interface’ for contact tracing, ever since privacy concerns were raised by several organisations and mobile app users. The brand has also announced bold steps like demanding ‘nutrition labels’ like display of data usage information from apps on its apps store starting from later this year.

One got to see this shift within multinational firms, when they had to make significant adjustments with the passing of the European Union’s General Data Protection Regulation (GDPR). Beyond the initial rumblings over policy overreach, firms eventually complied with the rules when the institutional framework to safeguard citizens’ rights was set in stone. As a consequence, users attained a level of understanding about liability of companies over their data management practices. The hope remains that these developments will help India fast-track towards creating its own regulatory framework a la EU’s GDPR and raise consciousness in the country.

Interestingly, concerns expressed in the tech world revolve around the possibility of stifling innovation as a result of excessive data protection regulation. Such a trend has been seen in Europe where decline in venture capital funding in new businesses is attributed to stricter privacy norms. On the contrary, some experts speaking about the flexible approach in the US have highlighted growing consumer trust and preferences for businesses with better privacy policies. It is being seen as the gold standard in delivering a superlative brand experience. A new emerging trend is also users’ increasing willingness to share data at a higher price – in return for additional and premium services.

Research initiative ‘IntAct’, by Kenya-based Busara Center for Behavioral Economics and Ashoka University’s Centre for Social Behavior change (CSBC) looks into the behavioural aspects of data privacy. Our experiments allowed us to understand user privacy related behaviour with respect to trust, risk preferences and willingness to share sensitive information. Our studies indicate that a ‘cool down period’ of a few minutes on the privacy policy page before a user can click ‘I agree’, can nudge them to be more mindful of their data sharing. It signals greater transparency from the company’s perspective, that there is nothing to hide, leading to greater willingness to share personal information by the users. Results also indicated consumers make swifter choices about sharing data when a standardised privacy rating mechanism, like a star rating, indicates the credibility of applications. This is further reinforced by Apple’s privacy labels initiative mentioned earlier. Such research initiatives contribute strongly to the evolving data privacy ecosystem in the country. These empirical findings further build the case for using privacy as a business strategy tool to gain competitive advantage.

The draft Indian Personal Data Protection Bill has been approved by the Union Cabinet. Once the bill comes into effect, there should be greater emphasis on privacy through regulatory means. It would also create increased consumer awareness and preference for businesses that follow and communicate privacy friendly practices. However, with the global tech giants taking the lead, we recommend Indian businesses to not stall and gain ground actively in the privacy game.

The author is Senior Advisor, CSBC, (Center of Social and Behavioral Change)

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