Online privacy as an integral component of strategy: allaying customer fears and building loyalty

Abstract

Purpose This paper aims to demonstrate how building competency in privacy can be used to transform the corporate strategy to generate a sustainable competitive advantage. A novel framework is presented as a guide to redesigning strategy by striking a balance between customer expectation and organizational objectives. In doing so, the paper offers four possible outcomes of accommodation, accumulation, association and affiliation, providing illustrations to each scenario for strategy formulation. Design/methodology/approach The relationship between privacy paradox and corporate strategy was examined through a qualitative research study. The author conducted 30 in-depth interviews on grounded theory methodology investigating customer insights on the nature and extent of privacy protection associated with e-commerce and organizational approach. Findings The customers are dissatisfied with existing data security strategies adopted by firms in protecting privacy. The over-reliance on systems has negatively influenced the communication between the organization and customers, leading to a possible competitive disadvantage. The firms need to redesign privacy strategy shifting from a system-driven approach to providing personalized service. Originality/value This paper presents a novel framework the privacy strategy matrix (PSM), introducing privacy as a strategic expedient in transforming corporate strategy facilitating privacy protection as a metaphor for differentiation. PSM framework provides a standard to evaluate the effectiveness of the corporate strategy in managing privacy manifesting a path toward deriving a sustainable competitive advantage.

Market-oriented corporate digital responsibility to manage data vulnerability in online banking

“…Hackers collect data by tracing online behavior, payment records and the browsing history of consumers. A unique consumer profile, denoted as a digital footprint comprising of sensitive information, including credit card details, is sold in the secondary market as a commodity (Liyanaarachchi, 2020). To date, the five most significant data breaches include:Yahoo, unauthorized access of 3 billion user accounts, 2014;First American Financial Corporation, unauthorized access of 885 million records, 2019;Facebook, unauthorized access of 540 million records, 2019;Marriott International, unauthorized access of 500 million records, 2018; andFriend Finder Networks, unauthorized access of 412 million records, 2016 (Kiesnoski, 2019).…”

“…In the “build” step of the CBE framework, the bank would use the co-created knowledge to build meaningful products and services that accommodate the identified segment's unique privacy situation to minimize vulnerability. This stage will require addressing critical areas, situations and contingent factors that worsen data vulnerability through the use of modern technology in artificial intelligence, big data systems and advanced data analytics (Liyanaarachchi, 2020). Thus, a proactive strategy to enhance consumers' ability to manage their resources with a high degree of control will reduce vulnerability (Hill and Sharma, 2020).…”

Online banking and privacy: redesigning sales strategy through social exchange

“…With these developments, the banks cannot treat every client in the same manner on privacy and security as each client or segment of customers will denote a unique attitude toward privacy risk and interest concerning information disclosure. Thus, banks need to use the digital footprint to design and implement personalized online promotions using advanced data analytics to segment consumers (Liyanaarachchi, 2020). The emergence of consumer data rights in open banking and GDPR has increased the urgency and importance of employing the proposed strategies and customizing privacy procedures to address individual privacy concerns.…”

Security as strategy

“…The potential for the risks involved to get bigger is huge – and according to a recently published article they are already bigger than we might have expected. In a study titled “Online privacy as an integral component of strategy: allaying customer fears and building loyalty”, author Gajendra Liyanaarachchi (2020) firstly underlines the scale of the problem, and like the first insurers investigates the commercial opportunity for firms to develop an effective privacy strategy for their customers. If they get it right, it could mean creating a sustainable competitive advantage in a new age of online piracy and cybercrime.…”