Why firms with an ethical rudder will become leaders

COMPANIES are finding it harder to gain the trust and loyalty of customers at a time when they actually know more about them than ever before. Why is that? Largely because customers don't feel the companies have earned their trust.

In today's digital world, every online click, like and swipe provides data about user interests, preferences, intent and even location to anyone equipped to collect these data swarms; and the growing ubiquity of location-based sensors, facial recognition, and social and mobile computing has made consumers subject to vast, and lucrative, analyses every day. Unless we throw away every device, turn off the Wi-Fi in our homes and shut the blinds, full white-out privacy simply does not exist.

What can be done to close what IDC calls the "consumer trust divide"? Both governments and enterprises have a part to play. Governments around the world and in Asia have begun introducing data protection legislation with which enterprises will have to comply. However, compliance alone isn't enough. With privacy becoming a grey area and trust getting harder to gain, companies are no longer expected to just get the job done, but they also have to do the right thing.

Legislating good behaviour

Data is highly valued and thus greatly susceptible to being accessed, stolen and misused by unauthorised individuals. The South-east Asian region has seen a rise in the number of cyberattacks over the past few years, with Singapore and Malaysia experiencing their largest data breaches. To address this, governments and industry organisations around the world are enacting regulations to serve as a standard for all companies.

The European Union's General Data Protection Regulation (GDPR) implementation last year was a great start. It encouraged many businesses to build a solid privacy framework and governments to re-evaluate their data privacy laws.

For instance, the Singapore government first introduced the Personal Data Protection Act (PDPA) back in 2012 and early this year, the local Personal Data Protection Commission (PDPC) proposed updating it with a data portability requirement. This update will require firms to have a solid business analytics engine for storing customer data, that can copy files and send them back to customers upon request.

The Hong Kong government recently published a "New Ethical Accountability Framework" prompting businesses to undertake privacy impact assessments similar to that of the GDPR. The regulation also underlined that businesses should not only focus on regulatory requirements, but also hold higher ethical standards that meet stakeholder expectations alongside the laws.

While the push from government agencies will help, legal compliance alone will not be sufficient to earn customers' trust. Customers will still want to see that the companies they share their data with have the internal motivation and framework for conducting business ethically as well.

Starting with a moral compass

Seeing how large corporations were put on the stand for ethical violations in the past year was a wake-up call for everyone that ethics cannot be taken for granted. The massive business impact of the loss of trust is increasingly clear from recent cases - no matter how big or how established the company in question - and statutory compliance does not mean much without a strong ethical core at its foundation.

Ethics can be a competitive advantage for business success, and companies today need to embrace ways to ensure this is embedded into their DNA. Here are some of the ways:

With ethics in place, you can rise to the top

Ethics must remain an enduring component of the digital economy. In a world of exploding data and fading privacy boundaries, businesses that can bolt down a solid ethical framework will be the ones who win customer trust. This is because ultimately, it is customers who will be the best moral guide and determine organisations' long-term success.