The business world has embraced digital transformation at scale and at pace over the last five years. Digitisation is now pervasive rather than niche, mainstream rather than an outlier.
“Digital, the word, will disappear. It's ubiquitous.”
- Tom Bigham, Digital Risk Partner
What’s next? The distinction between digital operations and business-as-usual will disappear, as with the term ‘e-commerce’ in the wake of the dot.com era.
Mirroring the early days of the commercial internet, digital technologies will cease to provide the competitive edge in themselves, but, they will emerge as the arenas in which companies will compete.
Without confidence it is very difficult to conduct business or engage with consumers. Digital ethics, the responsible use of data and digital technology by organisations, is paramount in earning that confidence whether that is in terms of privacy, data-sharing, responsiveness, transparency, fairness, sustainability, or the other values prioritised by consumers.
Given the premium put on trust in customer relationships, business leaders should be concerned by our research revelation that half (50%) of consumers think that businesses follow digitally ethical practices and just 37% feel that they are adequately informed by those organisations about how that digital technology is being used.
This confidence deficit contrasts sharply with the views of business leaders; more than three-quarters (78%) of whom are confident that their organisations follow digitally ethical practices. In fact, more than a third are highly confident (36%) compared to just one in seven (15%) consumers.
This polarisation of perceptions indicates that organisations have a dilemma balancing digital strategies they are pursuing with what consumers are comfortable with.
“We often talk about the head v heart dilemma of digital risk. The head; digital innovation is driven by demand for business growth, competition and commerciality. The heart; this is far less objective – driven more by consumers perception of and preferences for digital innovation..”
- Charlie Gribben, Digital Risk Partner
But the devil is in the detail, so drilling down into the survey results – across 26 use cases of digital technology – produces some striking insights. Interestingly, issues of control predominate, as consumers are discovering that the face to face human interactions they are used to are being replaced by sometimes invisible algorithms.
People are happiest using technology when they feel that they are ultimately in control of it. The more that the human actor has the authority to override or cancel a digital process, whilst having the option to interact with another human, the more confident they are. Quite simply, we need to find that equilibrium between full digitisation and human control. This confidence can be greatly enhanced by ensuring that three behavioural traits are respected.
1. Providing immediate assurance that an activity has happened as desired and transparency of the repercussions: Anyone who has used a digital technology is all too familiar with that queasiness that comes from not knowing whether a process or transaction has been successfully completed. When wi-fi connection is lost just as the app is processing a payment, consumers want to get immediate assurance that the activity happened as desired. Transparency is paramount as is the hybrid of technical excellence and the resilience provided by human back-up.
“What sources of proof or safety exist?.”
- Tom Bigham, Digital Risk Partner
2. Enabling humans to retain the power to make the ultimate decision: Comfort with reliance on digital technologies has increased enormously in recent years, witness the widespread popularity of voice-controlled virtual assistants. Artificial Intelligence (AI) is transforming data-heavy industries such as finance, retail and healthcare – in beneficial and positive ways.
3. Adapt consumer experiences depending on the perceived risk involved: Trust and confidence are greatly enhanced when the nexus of human, machine, risk and confidence are in harmonious balance. The survey results point to a sweet-spot in digitisation that exploits the machine capabilities in making recommendations and process efficiency while leaving the human actors with control and transparency over the final decision and outcome.
This is clearly seen in the fact that nearly half (46%) of consumers are confident about allowing digital technologies to monitor vehicle safety whereas this falls to just over a third (35%) who are confident in letting AI ultimately control an autonomous vehicle. The same psychology pertains in financial decision-making.
While 57% would be confident in letting a bot analyse their personal data to make investment recommendations, this falls to just 40% of consumers who would be confident in letting the same technologies manage their portfolios.
Considering the degree of impact if something goes wrong, asking ourselves ‘what’s the worst that could happen?’ is a key heuristic for humans. In the digital context, people tend to be much less confident in those technologies that could potentially have a high impact on their lives.
That can be seen in the relatively high levels of confidence in allowing automation of low impact, routine tasks such as making online payments (66%), shopping for low value items (62%) and controlling home heating and lighting (60%).
The flipside of this confidence is the relative aversion to ceding control to digital applications when the stakes are much higher in terms of potential negative consequences if an error is made. Hence, just 38% of consumers are confident of letting AI make medical diagnoses or recommend treatment while less than 32% would be confident in letting an AI application decide on judicial sentencing.
Such issues of trust in the emerging digital eco system are not intractable. More than half of consumers (55%) would feel more confident in using digital technologies if a regulator had more authority and oversight. The confidence with which organisations are addressing these regulatory and legal requirements varies significantly across industry. Banking (80%), manufacturing (70%) and education (70%) among the most mature compared with oil & gas (47%), energy (44%) and life sciences (38%) among the lowest.
“GDPR shone a light on how much we inherently trust organisations. But even some of the most advanced struggled to deal with the implications. Regulation should focus on enabling organisations, and helping the demonstrate positive outcomes.”
- Charlie Gribben, Digital Risk Lead Partner
The fundamental shifts in the way that risk manifests in a digital organisation will certainly require new risk, compliance and control frameworks. An agile approach that allows monitoring of risks in real-time, rather than introducing more friction, would ultimately benefit all parties.
But there is a balance to be achieved between introducing more regulation, ensuring better compliance with existing regulations, and simply improving transparency and communication around digital risk generally.
Tellingly, only 40% of consumers currently feel adequately informed by organisations about their digital policies, suggesting that more openness and consumer engagement would be a beneficial quick win in addressing the trust gap.
As companies continue to digitise, building confidence also means ensuring control over technology both internally and externally. Control in the instance doesn’t just refer to the guardrails put in place by an organisation to manage risk, it requires cooperation between many different players and relies on pre-emptive communication between them. Consider:
Digital brings new unknown unknowns, creating new risks for organisations. Being able to identify, assess and remediate these risks can give stakeholders the confidence that digital risks will not turn into digital issues.