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Introduction

This article, authored by Abe Smith, CEO at Dealflo, first appeared in Finextra.

 

When Mark Zuckerberg was called in for two days of questioning by Congress earlier this month, the world waited to hear what questions these powerful lawmakers, many former lawyers, had to ask. With the CEO founder of Facebook in the hot seat, would they ask the questions that technology specialists and journalists on both sides of the Atlantic have been asking ever since the Cambridge Analytica scandal broke in March 2018?

The answer, when it came to the hearing in front of the Senate, was no. Much of the first day of questioning was taken up by questions which showed that the interrogators were not technically-savvy IT expects, but ordinary Facebook users with an average level of technical expertise.

Warnings to financial services

Although labelled ‘tech dinosaurs’ by the media, the lack of technical knowledge showed by the Senate sounds two distinct warnings to financial services and technology companies who may one day be required to defend their technology processes in a regulatory or legal setting:

  1. They should not assume that the people they need to persuade (be they regulators, judges, politicians, or customers) have any specific IT or technical knowledge.
  2. Both a lack of evidence, and overly technical evidence which is difficult to understand or access, may fail to be persuasive.

The digital journey

Take for example, a bank who sign customers up to one of their products, let’s say loans, via a digital journey. Throughout that digital journey (from a customer application, identity verification to the signing of the agreement), the customer is sharing personal data, and the bank is using that data to make the transaction happen. This data could be simple elements such as their name and address, but it could take the form of more complex data, such as what the customer saw and did during the transaction, how they consented to the agreement, and what data was collected to verify their identity (perhaps biometric data, or facial recognition data).

Let’s now assume that that the customer believes that the agreement process was unfair or uncompliant, and that therefore they should not be bound by the agreement. If they take their argument to court, the bank will need to reply on the aforementioned data to help prove that the agreement process was fair and compliant, and to persuade the judge to uphold the agreement. When a company is relying on data as evidence, it suddenly becomes important to be able to present that evidence in a way which is simple, intelligible and persuasive. Companies who rely on a technical audience to which to present that evidence will be disappointed – as Zuckerberg’s Congress appearance shows, they cannot rely on judges to have any specific IT or technical knowledge.

In E-signature best practice for UK financial services companies leading electronic evidence lawyer Lorna Brazell advises that financial services companies may be helped in successfully refuting a challenge (from a customer, regulator or judge), if they provide ‘compelling evidence that is easily intelligible by non-technical individuals’. Financial services companies who fail to provide simple, persuasive, intelligible evidence will find themselves at a huge disadvantage when relying on data to help prove that their actions were fair, lawful and compliant.

The financial services industry may enjoy the spotlight being lifted from the banking to the tech industry at present, but in an age where more and more companies are digitising their processes, the lines between ‘tech company’ and ‘financial services company’ are increasingly blurred.

As banks and financial services companies transact digitally, and collect digital evidence, they might want to ask themselves: If they were required to persuade a ‘tech-dinosaur’ judge or regulator that their data could be relied upon as persuasive evidence, would they succeed?

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