Privacy of Online Banking Key to Customer Loyalty

Wednesday 6 April 2005 04:05 CET | News

According to the 2005 Privacy Trust Survey for Online Banking, consumers who have a high level of trust in their bank are more likely to perform a wider variety of more complex online banking tasks, such as automated bill payment or applying for new products or services.

The study, sponsored by Watchfire, Inc. and conducted by the Ponemon Institute, also revealed that these consumers are more likely to remain loyal to the financial institution they trust, translating into more profitable transactions for banks. The survey reveals consumers with a high level of trust in their primary bank are loyal - they arent seeking services from other institutions, with 55% stating they have never even visited another banks website. However, the study also revealed that 57 % of consumers with high trust in their primary bank say they would cease all online services with their current bank in the event of a single privacy breach. That could translate into the potential loss of millions of customers making even a single breach a very costly problem for banks. This Web-based study, conducted in late February and March, asked respondents to indicate how secure and confident they felt that their primary bank is committed to protecting the privacy of their personal information. A total of 2,328 responses were received (17.2% response rate) and the top banks selected as their primary bank for online banking are National City, Washington Mutual, U.S. Bank, PNC, Citibank and Wachovia. Earning Consumers Trust The study revealed the number one reason consumers use Web banking is convenience (71%). 59% are much more confident or more confident in online banking than branch banking. Combining convenience with confidence is a win-win situation for financial institutions with the potential of adding more online customers. Respondents were also asked to indicate what steps a bank should take to gain or increase consumer trust in its ability to protect personal information. The number one reported answer is to limit the sharing of personal information with third parties, followed by fewer annoying or irrelevant online ads or marketing promotions. The next most frequent response is having procedures in place to validate the consumers identity when they transact business with the Website. Some other findings include: - Significant customer acquisition opportunity still exists for banks. - 70% of respondents strongly agree or agree that their bank is committed to protecting their personal information. - Only 21% of respondents reported that an email from their bank is always or most of the time information they want to receive. Banks should be concerned that email communication may scare some consumers. Given that email has been one of the main avenues for targeted phishing scams, it is not surprising that the survey points to identity theft as the biggest customer concern in the event of a breach or violation of personal information. Although gaining and maintaining consumer trust is challenging, it must be a priority. Building consumer trust in the Web channel will impact customer acquisition and retention rates. To download a complimentary copy of the report, please visit

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Categories: Banking & Fintech | Online & Mobile Banking
Countries: World
This article is part of category

Banking & Fintech