The Use of Financial Apps: Privacy Paradox or Privacy Calculus?
Published: 06 November 2023
This paper examines whether the ‘privacy paradox’, i.e. a dichotomy between privacy intentions and privacy behaviours, is visible amongst users of financial services apps. Using a survey among Dutch consumers, we study to what extent people share financial data with third parties, and whether their data sharing activities are in line with their privacy concerns. We find that paradoxical usage of financial apps as measured by the privacy paradox metric is low, most users seem to make a rational calculation of benefits versus privacy risks. Paradoxical non-usage is substantial. This could be an efficiency issue, but is not a problem from a risk perspective. Regression analysis shows that app usage correlates positively with its perceived benefits and negatively with privacy risks. Furthermore, usage of certain types of apps depends on people’s trust in the app providers. Overall, the results point to privacy calculating behaviour amongst the users of the data sharing apps in this study rather than to paradoxical behaviour.
Keywords: Financial apps; Consumer choice; Discrete Choice Modelling; Metric; Personal Data; Privacy Calculus; Privacy Paradox; PSD2; Westin Index
JEL codes C35; D12; D80; G21; G23; G28; E42; O31
Working paper no. 794
794 - The Use of Financial Apps: Privacy Paradox or Privacy Calculus?
Research highlights
- (Upcoming) legislation like PSD2/3 and FIDA promotes the usage of financial data by third parties to enhance innovation and competition in financial services. However, there are concerns that consumers give their consent to access their data too easily.
- This paper examines whether the ‘privacy paradox’, i.e. a dichotomy between privacy intentions and privacy behaviours, is visible amongst users of financial services apps, using a survey among Dutch consumers.
- The share of app using respondents showing paradoxical behaviour as measured by the ‘privacy paradox metric’ is low, between 7 and 10%. Most financial app users make rational decisions: the benefits for them are higher than the risks associated with using the app. Privacy paradoxical behaviour among non-users of apps is higher, especially for financial information apps, which may be due to the slow market take-up of these apps.
- App usage correlates positively with its perceived benefits and trust in the app provider, and negatively with privacy risks.
- Overall, the results point to privacy calculating behaviour amongst the users of the data sharing apps in this study rather than to paradoxical behaviour.
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