We entrust a huge amount of our financial and personal information to digital platforms to use for online transactions. Consequently, digital trust has emerged as an important pillar of virtual interactions.But what does digital trust entail, and how does it play a pivotal role in safeguarding our digital interactions? And how are emerging technologies impacting digital trust?
What Is Digital Trust?
Digital trust is the confidence or expectation people put on organizations to protect their data and uphold their interests through their digital products and services. It’s the core of internet communications as organizations must assure users their data will be treated ethically, protected against abuse, secured from unauthorized access, and kept private.
When a person resolves to use a company’s digital product or service, they do so because they feel safe handing over their data to the company—proving their digital trust in it.
Why Digital Trust Matters in Online Transactions
Trust is a foundation of trade. For any exchange to occur between people, all parties have to trust they will each keep their end of the bargain. You pay for something; you expect to receive the goods you’d paid for.
In online transactions, this need for trust is extrapolated, considering the ability of people to exchange value despite geographical restrictions. Consequently, the organizations providing the infrastructure for online transactions are the de facto custodians of trust.
It’s not just personal data that’s at stake when transacting online: it’s money too. If a company doesn’t provide an online transaction environment that elicits trust, customers won’t want to do business through or with it.
Consider the collapse of FTX. When news broke that the company was using customer funds to conduct risky external trades collateralized by its own FTX token, digital trust in the centralized crypto exchange (CEX) platform was eroded. This and similar scandals in the crypto space cascaded the market into a bear run as investors took out their money to avoid losses.
While the ethics of the custodians of trust in online transactions play an integral part in assuring digital trust, it’s not the only important factor. Security matters too.
According to Statista‘s forecast, cybercrime will cost the world $13.82 trillion annually by 2028. This is problematic, considering that digital money is steadily replacing paper money in many economies worldwide.
For customers to trade online, they need assurance that their funds will be safe. Digital enterprises must prove they’ve implemented cybersecurity systems that safeguard customers’ funds.
Digital trust is the backbone of online transactions. Only by making people feel comfortable sharing their data and money online can an enterprise stay in business.
Threats to Digital Trust in Online Transactions
A threat to digital trust is any event that undermines the confidence and reliability of online platforms. Such threats can be multi-dimensional. However, we can classify them into a few main categories.
- Security incidents: If a company falls victim to security breaches that compromise customer data or result in loss of funds, it can severely erode trust. For instance, Equifax, a leading credit reporting financial institution, had a data breach that exposed the personal data of millions of people. The incident destroyed Equifax’s digital trust and resulted in a sharp decline in stock value. While the company managed to bounce back, it was a costly affair.
- Privacy concerns: If a company’s data collection and usage practices raise privacy concerns, customers hesitate to share their information, fearing it could be misused or shared without consent. A prime example is Facebook’s cooperation with Cambridge Analytica which resulted in voter behavior manipulation in several countries, including the USA. After the exposé, many Facebook users expressed dissatisfaction by deleting their accounts.
Image Credit: ShopCatalog - Unethical practices: If the people behind an enterprise have no morals when handling customers’ data or funds, digital trust in the organization will be hanging by a thread. The Wirecard scandal, which involved a series of corrupt financial activities that led to the loss of public trust and subsequent insolvency of the payment processor, is a good example of the consequence of unethical behavior.
- Unreliability and inaccessibility. Customers expect reliable services and accessibility when necessary. If a company’s infrastructure consistently experiences downtime that goes unattended, customers lose faith in its ability to serve them. Worse, if users can’t access timely customer service, they’ll not only find alternatives but also publish bad online reviews that damage further trust in potential customers.
Failing to address these threats can result in reputational damage, customer attrition, and business financial losses.
How to Build and Maintain Digital Trust
Building a trustworthy digital environment requires a multifaceted approach, will take time, and can be expensive depending on the organization’s size. However, it’s the cost of doing business and is worth every dollar.
At the forefront of building digital trust is implementing robust security measures. These should aim at securing data, monitoring and controlling incoming and outgoing traffic, and providing constant surveillance to prevent unauthorized access and keep customers’ data safe.
Meanwhile, technical measures must be supported by organizational policies. Clear policies and processes for data handling and storage should be implemented, and training sessions on data security best practices should be delivered continuously to staff members.
A commitment to transparency is crucial in fostering digital trust. In an era when news is awash with data breaches and misuse headlines which strike uncertainty among users, an organization should display more accountability.
Lastly, systems put in place to serve customers need to work. Customer service departments must be effectively designed to solve customers’ problems promptly. An organization must prove itself reliable and available at all times if it hopes to thrive.
How can you signal to customers that you can be trusted with their data? Simple signs like having an SSL certificate and a clear, concise privacy policy can help.
Implications of Technology on Digital Trust
Three disruptive technologies—blockchain, artificial intelligence, and the Internet of Things—are changing our perceptions of trust.
Blockchain technology introduced immutable records and made the decentralization of data more practical. Consequently, organizations can now efficiently store transactions in a resilient system while also taking advantage of the cryptographic superiority of blockchain technology to hold sensitive information.
Meanwhile, with artificial intelligence, businesses can perform analysis on vast amounts of data and tailor personalized user experiences, which makes digital platforms more user-friendly and intuitive. However, the rise of AI has also resulted in trust issues since it’s trained on biased data.
Finally, the Internet of Things means that everyday devices are connected to the internet. While this increases data flow and improves user experiences, it also raises data privacy concerns. Standardized protocols and regulations should be implemented to foster digital trust.
Digital Trust Will Only Get More Important
With the growth in data sharing, cyber threats, and global connectivity, building and maintaining digital trust will become more important. Customers and companies must navigate a landscape where personal, financial, and sensitive data flows seamlessly. Trust is crucial for security and privacy, and for ensuring the continued growth of digital innovations and collaborations.