View a full range of our ebooks

View full library

Explore

Our Location

The PHA Group
117 Wardour Street,
Hammer House,
London,
W1F 0UN

0207 0251 350
info@thephagroup.com
PHA Digital Studio
Fourth Floor,
47 Dean St,
Soho,
London,
W1D 5BE

0207 0251 350
info@thephagroup.com
PHA Finance Department
117 Wardour Street,
Hammer House,
London,
W1F 0UN

0207 0251 350
info@thephagroup.com

The Privacy Shield – Safer Harbour or Sinking Ship?

The Privacy Shield – Safer Harbour or Sinking Ship?

This week, technology firms across Europe breathed a heavy sigh of relief as Brussels and Washington reached a deal in the eleventh-hour on transatlantic data transfer and privacy rules to replace the defunct ‘Safe Harbour’ agreement, which was ruled illegal in October 2015.

The new Privacy Shield pact, also known as ‘Safer Harbour’, will see the US give an annual written commitment that it will not conduct mass or indiscriminate surveillance of EU citizens, which will then be audited by both sides once a year.

But what went wrong? And why is it so important?

To answer that, we need to go back to the case of whistleblower, Edward Snowden, who in 2013 leaked thousands of classified documents revealing details about the global surveillance programme.

Perhaps the most infamous of these was the PRISM programme, which collected data from around the world including emails, video, audio, photographs, documents and other related materials in collaboration with at least nine companies – Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, Skype, Youtube and Apple.

This then brought the Safe Harbour agreement into question. EU privacy law forbids its citizens’ personal data from being sent outside of the union to locations without “adaquate” privacy protections, so the deal saw the US promise to abide by these standards. However, in order to avoid drawn-out procedures delaying transfers, the deal also allowed companies to self-certify their data practices.

Last year, a concerned Austrian law student called Max Schrems took Facebook to court in Ireland after filing a privacy complaint that effectively challenged the safeguards Safe Harbour had in place – he won. The old deal was scrapped and watchdogs were given three months to ‘put their house in order’.

 

Max Schrems

Max Schrems, Activist. Image courtesy of abdeslam ait hida on Flickr

 

This left some 4,000 companies in limbo and half a trillion dollars of trade at stake. Apart from the tech giants, who hold all user data at their US headquarters, there were many small businesses that had relied on the agreement to outsource their human resources, payroll and other tasks involving personal data about customers or staff.

So it’s no surprise that many organisations were quick to celebrate and get back to business as usual.

However, not everyone is pleased. Schrems, along with privacy agencies across the continent, have since pointed out that the that the US has not changed its surveillance techniques to be compliant with European law – something that leaves plenty of scope for Privacy Shield to being ruled invalid, just like its predecessor. Meanwhile, the European’s Data Protection Authorities have warned businesses to hold fire on signing up until April while they analyse the legality of the agreement.

My main question, however, is whether the EU would ever dare enforce the law again. Besides the turmoil and angst caused by the first ruling, there’s no denying the benefits multinationals like Amazon and Google bring to an economy, so would they ever risk the potential backlash? Think about the issues surrounding tax avoidance – where’s the real action there?

To me, it feels like we’ve reached an impasse – the US wants to snoop, the EU doesn’t like it, but neither want to lose what the other has. So instead they crack open the champagne and watch a leaky ship slowly sinking in a shark-infested harbour, because what else can they do?

Fintech Week, Fintech Year: What to Expect in 2016

Every year more and more events focused on the fintech industry are appearing.

In 2015 alone there have been umpteen showcase occasions focused around finance, innovation and the technological challenge to the banking industry.

From Finnovate Europe in early February and Finnovate Spring in May, to the whirligig of Fintech Week in September and the upcoming Fintechtonic Awards in December, the landscape has become busier than ever.

It’s exciting.

It’s loud.

And there’s no sign yet that fintech’s rise is slowing down.

Fintech week, The PHA Group

‘Image courtesy of ING Group on Flickr’

In fact, the sector looks to be increasing across the world. Whilst London may have reached record highs for fintech investment, securing around 75% of the $2.2bn raised by UK firms since January. According to Accenture’s new report investments in financial technology in Asia Pacific are set to quadruple in 2015. This estimate comes from the fact fintech investment has hit $3.5bn, up from $880m throughout 2014. The report also revealed that 40% of these investments were in payment innovations, and 25% in lending.

The monumental surge of interest, development and use of fintech is evident. Consider Money 20/20, the annual financial services conference held in Las Vegas in October: numbers of attendees have soared from 2300 to 10,000 in just four years, from 85 showcasing companies to 506 across a range of industries from mobile to fintech.

So with no signs of stopping and all evidence pointing to 2016 as yet another year of exponential innovation and accomplishment, what can we expect as we move through the winter and into the new year?

Expect more new entrants

The industry will be all too aware of the increase in new entrants. Primed for technological innovation, traditional financial services face a continued rise of new businesses and products with their own agendas and ability to disrupt. Generating further competition, it’s likely banking services will feel the impact more keenly in the next twelve months. This is particularly true given the focus on the ‘Uberisation of Payments’ – startups aiming to revolutionise financial services to become efficient, effective, and inclusive.

Blurring disruption and innovation

In the 7th Annual Innovation in Retail Banking Report from Efma and Infosys Finacle, banks considered new disruptors the second highest threat (41%) after big tech companies like Apple and Google (45%). However, as banks accept they can’t stop the startups, more are likely to follow the trend set by banks like Barclays who finance them. Responding to the perceived threat by increasing investment and harnessing their innovations for themselves, this could help to improve the overall customer experience at banks.

Moreover, the regulatory landscape that has enabled so many fintech startups in the UK to thrive is becoming tougher. New developments now need to integrate more successfully, to have flexible and agile IT systems capable of responding to demands from entities like the FCA. Smaller entrants may therefore need extra support due to limited resources if they’re to build robust systems. The relationship might thereforesee a shift from challenger to partner.

Bitcoin vs. Blockchain

Cryptocurrencies are beginning to shake off their dubious reputations. Part of this is because of the underlying blockchain technology. Fact is, Bitcoin might have started the conversation, but now it’s being sidelined as household names have hopped on board the blockchain bandwagon in order to better their businesses through its technology. These include UBS, Citi Group and NASDAQ, all of whom seem to agree that blockchain will fundamentally alter the infrastructure supporting the finance landscape. There’s even the first Blockchain-inspired bank in the pipeline – Secco Bank, founded by Chris Gledhill.

Millennials & harnessing fintech for good

With COP21 only weeks away, businesses that are not ready for a world where they can balance principles and profit are likely to be left in the dust. Part of the reason for this is the rise of the millennials, those 18 to 34 year olds, in particular, the older HENRYs (High Earners Not Rich Yet) that comprise the top consumers of fintech. However, beyond their dissatisfaction with traditional banks and their love of frictionless payments, they’re also much more socially conscious when it comes to business. As Bill Roth wrote, ‘their combined experiences have made them fiscally conservative, socially tolerant, environmentally aware and urgently engaged’.

This is not to say older generations don’t want to manage their assets and bank accounts from their armchairs, but millennials are the thread stitching together the desire for change with the ability to use technology. They view the sharing economy as an efficient utilisation of their money. They seek transparency, appreciate brands engaged with causes, and are more invested in harnessing business for good. We can already see it in the popularity of blockchain and fintech’s ‘Robin Hood’ narrative (see Transferwise and Lend Invest). They also seek financial inclusion, revealing yet another reason for the popularity of mobile payments and uberisation.

The problem of data and cyber-security

The digitisation of services has obviously created its own set of problems. Just look at all the different hacks over the past twelve months – from Sony to TalkTalk, the risk of data theft has become of utmost priority to consumers as well as their financial providers. Threats from malware and hackers demonstrate the need for vast cyber-security investment in the finance space, and nimble fintech companies could be more adept at this than traditional, cumbersome institutions.

Fintech becoming mainstream

As fintech influencer Oliver Bussman argued, technology is changing the dynamics in the financial services industry. This may seem obvious, but as fintech continues its climb, more people will become aware of its potential and more customers will start using it. Fintech is moving beyond revealing and disputing antiquated practices, providing opportunities for competition, and overhauling the experience for everyday consumers. It’s generating positive change. It could even be argued that technology is making finance trendy as the likes of Apple Pay bring fintech into mainstream consciousness.

And, ultimately, it is this shift of financial awareness, innovation and technology into today’s zeitgeist that makes fintech 2015 and 2016 potentially so exciting.

How to Rebuild Trust in Your Tech Brand

Scandal, scandal, scandal. Security breaches, data hoarding and ethical ambiguity – if the likes of Apple, Snapchat and Sony are anything to go by in terms of trust in technology, they certainly didn’t do SMEs and entrepreneurs any favours in 2014.

Our trust in technology brands was found to have dipped last year.

Our trust in technology brands was found to have dipped last year.

Last week, a report highlighted that Brits’ trust in technology had substantially dipped in the last year. Consumer electronics and telecoms, in particular, both took a tumble, and now, as other countries enthusiastically steam ahead with innovation, Brits’ trust (or lack thereof) in tech is significantly impeding our progression towards a connected future.

So what can tech companies do to reassure British consumers? Here are our top three tips to inspire, maintain, or, in some cases, rebuild trust in your tech brand.

Data and Security

After numerous high profile data hacks and security breaches in 2014, consumers are understandably concerned about how their details are mined, managed and manipulated. For tech brands, ensuring you are plain and transparent with your use, storage and trading of data is vital to allay the fears stoked by these incidents and strengthen that all-important consumer trust.

High profile hacks have left consumers wondered whether their data is safe.

High profile hacks have left consumers wondering whether their data is safe.

Only a couple of months ago, MPs on the Commons Science and Technology Select Committee were compelled to call for new guidelines for apps and websites, requiring them to explain clearly their use of personal data. Increasingly, regulation is making it difficult for technology to evolve, so instead of waiting for more guidelines and possibly laws to be introduced, why not prove to society that tech brands can be responsible, transparent and effectively self-regulate? As Andrew Miller, chair of the committee, noted: “Socially responsible companies wouldn’t want to bamboozle their users”.

Quality and Safety

Technology as a topic can often seem inaccessible – after all, there’s a lot of jargon and few people understand how software and hardware is actually built. So when there are rapid developments, it almost appears too good to be true, leaving some sceptical and mistrusting consumers questioning the validity of research and the quality of the design of a product.

In fact, nearly half of UK consumers believe that innovation is happening too quickly – but then, it’s not in the best interests of tech developers to slam on the brakes. Instead, it’s vital that tech companies address these concerns directly, by allowing people to trial and test their capabilities. Demonstrating quality by offering your product for high profile reviews is a good way of gaining advocacy from trusted, independent parties.

Positioning your company as experts in a relevant field – through thought leadership pieces and interviews – will also reassure consumers that the same intelligence and conscientiousness has been baked into your product or service.

Purpose

Perhaps one of the most surprising snippets to come out of the mammoth Consumer Electronics Show 2015 earlier this month was an admission from Gary Shapiro, CEO of the event. He acknowledged that over-reliance on digital products is a “Natural trend that people are talking about”, and that he believes in the good of “everything, in reason.”

A digital detox, it seems, may well be on the horizon – and tech companies must be prepared. Consumers mistrust products and brands that serve no true purpose, or that bombard them with so many that they can’t discern what the product is really for. So decide what problem you want to solve and where your niche lies, instead of trying to be a jack-of-all-trades. Less is more – or, in the immortal words of Coco Chanel, “before you leave the house, look in the mirror and remove one accessory.”

In your communications, tech brands should ensure that the value your product adds to the market is conveyed clearly and consistently. If consumers can see how your product will save them time, bring them new information or simply entertain them, trust in your brand will strengthen. That one must-have feature of your offering should shine through: purpose over puff.

As we move forward into 2015, it seems that innovation is no longer enough. Trust in your tech brand must be built upon a foundation of transparency, independent advocacy and clear communications – only then will Brits embrace the advances you have nurtured. How will trust in your brand fare this year?