A study by the World Economic Forum identifies a series of new technologies that banks and other institutions can implement to exchange data in order to protect privacy between them. This exchange allows a comprehensive analysis to identify possible risks in the industry and prevent financial crises.
Beyond the benefits to the system, this type of technology, called “privacy improvement techniques” helps improve data exchange with the aim of preventing fraud and offering advice financial, among other useful functions.
In this way, these techniques allow reducing the tensions that arise from the exchange of data. Instead of threatening the privacy of the client, this new technological wave protects and improves the collaboration of the industry.
This type of technology has been around for years, but it is now when they are ready to implement in the real world of banking and other types of financial services. If these tools are used, they will be a new era of the much more collaborative sector in matters related to risk and product development.
These five technologies specified in the World Economic Forum are:
- Differential privacy: it is a statistical system that allows data collection and analysis without compromising the identity and privacy of those who provide such data.
- Federated analysis: each of the parties share the ideas of their analysis without sharing the data itself.
- Homomorphic encryption: data is encrypted before sharing. This allows them to be analyzed, but not decoded in the original information. This type of figure prevents organizations from using cloud computing to extract data.
- Zero-knowledge tests: users can demonstrate their knowledge of value without revealing the value itself.
- Multi-part secure calculation: data analysis is distributed among multiple parts so that no single part can see the complete set of inputs.
The report describes how each technique works at a high level (thinking of a non-technical audience) and illustrates how this technology could be used in the financial industry through several hypothetical use cases.
These technologies, used separately or together, greatly reduce the risks associated with data exchange and have the potential to redefine the dynamics of data exchange in financial services fundamentally. Opportunities for these technologies include the ability to:
- Improve detection and prevention of fraudulent activities
- Identify the risks of the entire system and prevent financial crises
- Allow new forms of personalized digital advice
Putting them into practice will require a certain degree of technological experimentation. However, the benefits of large-scale adoption are clear and speak of greater alignment and action among stakeholders, the key to issues of systematic importance.