The year 2018 is barely underway and, already, digital trust initiatives have captured headlines. Facebook’s Mark Zuckerberg has said his platform will de-prioritize third-party publisher content to keep users focused on more “meaningful” posts from family and friends. Google has led off the new year by blocking websites that mask their country of origin from showing up on Google News. And the European Union’s upcoming General Data Protection Regulation (GDPR) will affect every organization around the world that handles personal data for EU residents. The regulations will also, no doubt, inform data protection laws and corporate trust-building strategies elsewhere.
Even China’s opaque behemoths have started the year with unprecedented acknowledgements of the need to address trust concerns: Tencent had to publicly deny that it collects user WeChat history after it was openly challenged; Alibaba’s Ant Financial apologized to users of its mobile-payment service for automatically enrolling them in its social-credit scoring service.
What these stories underscore is that our digital evolution and our productive use of new technologies rests on how well we can build digital trust. But is it possible to measure digital trust and compare it across countries? Are there countries where guaranteeing trust is a more urgent priority and will draw a larger share of trust-building resources and regulations? The Fletcher School at Tufts University and Mastercard have a launched a research initiative to address these questions by studying the state of digital trust across 42 countries. Here are some of our initial findings, drawn from the study, “Digital Planet 2017: How Competitiveness and Trust in Digital Economies Vary Across the World.”
Trust Eases Friction
In framing a definition of digital trust, we considered the factors that determine the quality of interactions between two parties using a digital medium: users, who are on the “giving” side of trust, and the companies that build the platforms. We refer to these parties, respectively, as givers (e.g. those who call up a car on a ride-sharing app, check news on social media or pay for an online transaction) and guarantors (e.g. the ride-sharing company, the social media platform, and the digital payments technology) of trust. In addition, on the side of the guarantors are those providing broad trust-building measures (like cybersecurity companies), laws and regulations (like the forthcoming GDPR), or the technology companies (like Akamai) that make the online experience seamless and convenient.
Trust reduces several types of friction in a transaction between givers and guarantors. This friction has many causes — some are infrastructural or because of poor design and functionality; some are systemic, such as regulatory or legal requirements or identification and data security measures; and some are because of uncertainty between parties to the transaction. This translates into different ways to measure trust.
Trust Can be Compared Across Countries
We wanted to calibrate trust holistically so we could measure it and develop global comparisons. We considered four key dimensions: Behavior, Attitudes, Environment, and Experience. The first two are associated with the givers and the last two are a result of actions taken by guarantors. You can find our scores on these dimensions across 42 countries in the graphic below.
1. Behavior: How do users actually respond to frictions in their digital experiences and environment?
Since every digital interaction involves some friction (for example, you have to enter a security code or wait for a page to load on your mobile device), one can make the case that users display a modicum of digital trust by simply completing a transaction. To ensure comparability, we combined anonymized data and observations aggregated at a country level from several data partners, such as Akamai Technologies, Blue Triangle Technologies, and Mastercard, on how tolerant users are to a given level of friction and whether they persist in completing a digital transaction. The higher the proportion of users that complete a comparable transaction across countries for a given unit of friction is interpreted as behavior that is more trusting. We scored 42 countries in terms most to least tolerant behavior.
2. Attitudes: How do users feel about the digital trust environment?
A typical way to gauge trust is to survey users with questions such as: How do you feel about the digital environment? Do you trust and find value in your interactions? Do you trust tech company leaders? Do you trust governments to respect data privacy or tech companies to use your data responsibly? Do you trust businesses and institutions will protect your data and provide value? We combined responses to multiple surveys from a variety of sources, such as the World Values Survey, CIGI-Ipsos, and Edelman’s Trust Barometer.
3. Digital Environment: What are the “guarantor” mechanisms for building trust in the digital economy, and how robust are they?
We considered three essential trust-building factors: privacy, security, and accountability. Privacy is one of the foremost areas of concern for users, from massive hacks of sensitive information to increasing government and corporate tracking of digital activities, identities, and locations of users. Online security is the second challenge for guarantors of trust. With more resources available to malicious actors, and a range of tools easily obtainable, cyber-attacks and repeated use of ransomware have continued to escalate. Data on attack incidents are a useful proxy for the risks to users. Accountability is the third key factor because, as the risk of incidents increases, users need recourse options, such as legal frameworks that hold businesses and institutions accountable or identity management systems.
4. Digital User Experience: How do users experience the digital trust environment?
Enhancing digital privacy, security, and accountability involves some tradeoffs: the measures might add friction, which affects the overall user experience. Left unmanaged, even these “positive” frictions (e.g. multiple passwords, identity authentication) can have a perverse effect of making the user less willing to engage online. In addition, negative frictions make users less trusting. The ultimate goal ought to be “intelligent friction”: balancing a seamless experience with proper protections.
In analyzing this tradeoff, we compared the speed and ease of use when transacting online, drawing upon data on multiple sources of friction — regulatory, infrastructural, and identity and interface-related. We use this aggregate as a proxy for the quality of the users’ digital experience in a country.
Collectively, these four dimensions provide a comprehensive framework for calibrating digital trust, facilitating cross-country comparisons and benchmarking. Indeed, trust involves a system; evaluating trust gaps and taking actions to close them call for holistic approaches.
While market surveys have been the traditional means of gauging trust, decision-makers must also consider a “trust paradox”: what users say is at odds with what they do online. When ranked by behaviors, the top 50% of countries have a median attitudinal score of 2.41, while the bottom 50% have a higher median attitudinal score of 2.51, suggesting that, on average, the more tolerant countries report less trusting attitudes.
Ultimately, for a guarantor, it is behavior that counts; lower tolerance for friction will cause a guarantor to lose business. We recommend that decision-makers rely on user behavior rather than just traditional attitudinal surveys to evaluate how well their digital users trust them. The beauty of digital environments is that such behavior data is abundant.
Trust Surplus vs Trust Deficit
We did an earlier study of global digital evolution, “60 Countries’ Digital Competitiveness, Indexed”, that divided 60 countries into Stand Out, Stall Out, Break Out, and Watch Out nations based on their state of digital evolution (ranked by the Digital Evolution Index, DEI) and their momentum (how their DEI rank changes over time). We find a surprising pattern: of the 42 countries studied here, the “Break Out” countries, with low DEI rank and high momentum, in general, display higher tolerance for friction and less than favorable experience and environments; the “Stall Out” countries that are digitally mature and have slower momentum have the opposite pattern – lower tolerance for friction and superior experience and environments. The former has a trust surplus and the latter, a trust deficit; in either case, there’s a mismatch between the quality of the digital experience and environment and the users’ levels of tolerance for friction.
As we explained earlier, user behavior is more relevant as a trust measure than what users report in attitude surveys. So, in the chart below we decided to compare two things – users’ behavior against their environment/experience. The last two correlate well, so it made sense to combine them.
Despite high levels of friction, Break Out country users are more likely to put up with these frustrations than those in more digitally evolved countries. Online users in these countries are, more typically, early adopters, often younger and enthusiastic about new technologies. These users expect there will be problems with the technology and are willing to work with them and view the analog alternatives to be worse.
By contrast, developed country users, who have come to expect high speeds, ease and reliability, have much lower demonstrated tolerance for friction. The irony is that, relatively speaking, these countries have less friction because of superior environments and experiences.
Thus, we expect that “Stall Out” countries will demand disproportionately greater trust-building investments. Technology providers must work harder to win and retain user trust. The privacy, security, and accountability aspects of the digital environments here have to work more efficiently, with less complexity and feel more convenient and fast. This means faster connections, less cumbersome user identity authentication, easier and convenient payment processing, firmer privacy regulations and more credible assurances of privacy and security of data.
Trust-building is not only central to our digital future, it is also complex — and it costs money and resources to guarantee trust. Effectively building trust in a global digital marketplace requires a strategic choice of knowing where to play. You can’t put equivalent investments in every market. Our framework offers an approach to figuring out where to prioritize and ensure profitable growth.
From a user’s standpoint, some countries will have more trustworthy digital environments, investments, and regulations than others. From a tech company’s standpoint, this picture is not a static one; as users’ relationship with the digital economy evolves, they will demand more trust guarantees. And as with everything else in our digital evolution, users’ expectations and interests will change quickly. So will public sentiment and regulatory pressure. It will be up to all digital companies to keep up and innovate in this new frontier for competitiveness: winning digital trust.
Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. We always urge you to read the methodology carefully.
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