Customer privacy concerns are key impediments to international growth in banking and commerce, and there are many companies and individuals who remain “underbanked” due to these issues. Fortunately, recent advances in blockchain and other cybersecurity business technologies can help address consumer and regulatory requirements, particularly in the current volatile and changing commercial climate.
Privacy: A Global Concern
The recent vote by Britain to exit the EU — the so-called Brexit — elicited various reactions from many quarters. It may be said, however, that there is consensus on one topic: Personal privacy, regardless of country, should be jealously guarded, and personal data used sparingly and appropriately. In that regard, the emerging technology of blockchain, if judiciously implemented, may provide privacy support both within and outside a particular jurisdiction.
Many countries are concerned about the collection and use of their citizens’ data outside their national borders. In many instances, even a well-intentioned viewing of data can be construed as collection and use.
Until the end of 2015, when it was invalidated by an EU court, one common method of EU-to-U.S. data flow was the Safe Harbor framework. Work is now underway to replace Safe Harbor with a new construct, called the EU-to-U.S. Privacy Shield.
Privacy Shield is now coming into effect, and it is gaining rapid acceptance as a tool intended to provide privacy controls to participating countries. There are also alternative and complementary ways to safeguard privacy, such as the EU’s Binding Corporate Rules for particular cross-border data flows.
No Privacy Without Cybersecurity
Regardless of particular regulatory implications, it’s important to define the privacy that we are trying to protect. Privacy is the expectation and assurance that information about a person will be viewed, used or stored appropriately. The expectation of privacy thus includes not only information in digital form, but visual and oral information as well. We don’t want anyone looking through our blinds at home or hiding under a railway seat to listen to our conversation.
In the information technology context, there can be cybersecurity without privacy, but there can be no privacy without cybersecurity. For example, if your personal banking credentials are closely controlled on your internal smartphone drive, you may consider them to be private. But if your smartphone is compromised due to a lack of adequate security, your privacy is nonexistent.
Chip Off the Old Blockchain
Blockchain is ultimately a tool that provides a secure, transparent, distributed ledger. Its encryption, distributed transactions and transparency help provide privacy in complex, multiparty operations. Any addition to blockchain may have further approved encryption and access controls. Thus, blockchain can provide a cost-effective, efficient banking solution in situations both large and small, particularly for those who have previously lacked full access to banking infrastructure.
But the security mechanisms found in blockchain are not always enough. When necessary, blockchain may be further reinforced by security-compensating controls such as logging, monitoring and alerting. These can anticipate, prevent, detect and remediate improper data intrusion or information extrusion.
Additional supporting technology may be found in such means as IBM’s patent pending, “Detecting Business Anomalies Utilizing Information Velocity and Other Parameters Using Statistical Analysis.” This innovation is designed to provide significant supporting countermeasures and compensating controls for banking transactional integrity, security and privacy. This should complement and strengthen blockchain implementations.
Although Great Britain had been in the EU, its currency — the pound sterling — was never subsumed into the euro. For hundreds of years, if you looked at the edges of a one-pound coin, you could see elaborate milling to prevent counterfeiting. This milling often contained in tiny print the phrase “Decus et Tutanem,” a Latin expression that translates to “an Ornament and a Safeguard.” The technology of that era could provide an ‘ornament’ for business enablement as well as a ‘safeguard’ against counterfeiting. Today, we have blockchain, which can help prevent digital counterfeiting while aiding new and innovative business processes.