“The key issue going forward is who do people trust?”

Digital payments are on the increase. By executing these transactions we generate data that reveals a lot about us. But what exactly? And what can the firms holding this data do with it? Shivaji Dasgupta, Head of Data and Artificial Intelligence (AI) at Deutsche Bank, provides answers.

Video: Does paying online mean I have to forfeit my privacy?

Many people who preferred cash - prior to the pandemic - are paying digitally today. Is Big Brother watching them now?

It’s quite simple: the more digital our lives become, the more information we disclose about ourselves. Tracking the movements of a physical banknote is very difficult. It’s a very different story with the digital trail we leave behind us. One thing that is clear, however, is that how this data may be used is highly dependent on the prevailing local culture.

Do you have an example?

In South Korea during the pandemic the movements of customers could be tracked so accurately via their card payments that the government was able to use them as the basis for Covid response measures. In Germany and the rest of the EU this is a non-starter, simply because it is forbidden by the European data privacy regulation. But even with this legislation, it is still possible, with the customer’s consent, to deduce a great deal from payment transaction data: consumption habits, wealth situation and creditworthiness, for example.

This is really quite personal. How well is this data protected?

The truth is that in the digital world this data is “somewhere” out there and it’s not clear in every region who can access it. In Europe there are strict regulations, but in other countries this is not the case. Businesses often treat this responsibility in different ways. That is why it is so important that customers entrust their data to trusted parties only. At the same time firms must constantly demonstrate their trustworthiness. After all, the key issue going forward is who do people trust?

Why is this so important for the future?

Because our personal data profiles are growing all the time. This is already happening due to smartphones and satellite navigation devices, and going forward a further increase will result from self-driving cars or fridges that can autonomously reorder food items as they run out. Such data is extremely valuable – so valuable that we could even use it as a means of payment at some stage.

Data is extremely valuable – so valuable that we could even use it as a means of payment at some stage.

This sounds like a vision for a distant future. What could this look like in practice?

Apps are already available that detect which companies gather information about their users. So you can use the app to decide who receives your data – and earn revenue from it. If people generally have control over their own data in future, firms will be prepared to pay for it. Then data could acquire a fixed price and be treated like cash to some degree. So you could deposit your data at a bank which would look after it and perhaps even pay you interest on it.

Why should you still go to a bank for that?

Banks have been trusted institutions for centuries. They have long been specialists in providing secure custody of cash and personal valuables to their clients. They can also assume this function in the digital world, if they have the right infrastructure for it. Another advantage is that banks are highly regulated, particularly when it comes to sensitive data. And if, at some stage, we really do use our data for payments, there could be banking data secrecy legislation that would oblige banks to provide robust protection.

How do clients benefit from banks possessing so much data about them?

The current benefits are relatively simple: banking transactions are becoming more convenient as a result. When we know clients and their payment transaction information well, we can make them offers that are more appropriate to them and their lifestyles.

Like what?

Before someone slides into an unauthorized overdraft, we can automatically offer them a loan so that it doesn’t become too expensive. Or we can notify clients if their bills for electricity, mobile phone or for subscriptions are higher than what most other people are paying.

And what about security?

Here, too, it can be helpful for clients to make digital payments. If, for example, you pay for something in a country you're visiting for the first time, we could ask you to confirm the payment using fingerprint or facial recognition technology, so that we know no fraud is taking place. And the best thing is that no-one has to look at your personal data for this. It can all be taken care of by a machine operating in the background.

How does that work?

With intelligent algorithms that carry out standardized checks to identify anything unusual in data. Only if there is something to suggest possible fraud would a relationship manager be alerted. This is not yet in use. But while the idea of paying with using data is still a very long way from becoming a reality, I can imagine us being able to offer this service in the near future to customers who would like an additional layer of security. This might be the next step.

About Shivaji Dasgupta

Shivaji Dasgupta joined Deutsche Bank in 2018 and leads the conceptualization and implementation of data-driven products, especially innovative cloud products and AI themes across the group. He is part of the Cloud and Innovation Network team within Technology, Data and Innovation at Deutsche Bank. In addition, he leads the Bank’s position on data economy and cloud use with sensitive data towards external cross-industry forums such as German Banking Federation (BdB), European Banking Federation (EBF) and European Cloud Initiative Gaia-X.

Maike Tippmann

values her privacy. The question of what happens to her payment data when she increasingly does without cash in everyday life has been on her mind ever since she got her first credit card. Because she is convinced that other people feel the same way, she takes every opportunity to ask experts: How transparent am I when I pay digitally? The answer, she finds, is immensely reassuring.

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