Consumer Fears About Online Security Persist

The survey of 1,744 U.S. consumers, part of the latest installment of Unisys Trusted Enterprise Index (TEI), also reveals that three out of every four consumers said they are prepared to switch banks for greater security protection of their personal information. Moreover, slightly more - 77 percent - are willing to change banks for better protection of their money. This represents a 50 percent increase in willingness to switch banks, as compared to a 2005 Unisys study on identity fraud and bank security issues.

The Unisys Trusted Enterprise Index is a broad, multi-year global initiative that explores business, government and consumer perceptions of trust, security and privacy issues. This current research segment includes an in-depth analysis of consumer trust of online banking, airline security, border security, and corporate governance, among other concerns. It follows the first wave of TEI research announced last month that measured the importance, impact and influence of trust and security based on views of senior business and technology executives.

The TEI shows that concern about bank card fraud and identity theft is so high that nearly one in every two consumers polled has ceased using online personal banking services, as well as telephone and Internet-based shopping, if the transaction requires a credit card number. As a result, certain banks and online retailers stand to lose a large portion of the $32 billion in online shopping this holiday season, revenue that is up 18 percent from last year, according to JupiterResearch¹.

Banks and retailers can expect consumer fears to continue, as 63 percent of survey respondents believe credit card fraud and ID theft will become an even bigger security threat in the future. This majority of consumers place much of the blame on the organizations and the government entities responsible for regulating them, claiming they are not doing enough to protect and secure their personal information.

“It’s telling that consumers, especially during the busy holiday season, are willing to forego the convenience of shopping online for peace of mind that their personal information and finances will remain secure,” said Frank Liddy, partner in the global financial services practice at Unisys. “This trend is bound to continue into the new year and, unless processes and perception change, banks stand to lose substantial revenue to competitors who are doing a better job of addressing consumer fears about privacy and security.”

“We anticipate that this research and other facets of the TEI will help banks and online retailers to better define security and business processes so they can alleviate consumer fears and provide a safer, more reliable service to their customers,” Liddy continued.

Despite this huge increase in consumers willing to consider taking action and switch banks for more security, only a minority of consumers will pay for protection. Only 10 percent were willing to pay for these services, compared to 40 percent of consumers who were willing to pay additional bank fees for greater security in a similar study Unisys conducted last year.

“This drop in consumers willing to pay for increased security and privacy measures indicates a much greater consumer expectation that banks will take on most of the responsibility in providing stringent security and privacy protection,” according to Liddy. “In fact, given that 84 percent of consumers believe banks should provide them with practical solutions for combating fraud and identity theft, there is a real opportunity to connect with customers and rebuild trust and loyalty through broader security education efforts.”

U.K. Consumer Fears Similar

The TEI includes a companion study of U.K. consumers that revealed similar findings. Actual incidence of bank card fraud and identity theft appear high in the United Kingdom, with one in seven people having suffered from bank card fraud and one in 20 having been victims of identity theft. As a result, a majority of consumers have altered their behaviors by ceasing to bank and shop online – much like U.S. consumers.

One in every two U.K. consumers would consider switching banks for greater security; however, despite their concerns, only one in seven consumers is willing to pay additional fees for added security. Almost every consumer polled (95 percent) believe that banks should provide their customers with better solutions for combating fraud and identity theft.

About the Research

The Ponemon Institute, a leading independent firm that specializes in trust, privacy and security research and analysis, conducted the survey in November 2006 on behalf of Unisys. The web-based survey polled 1,744 respondents from a sampling frame of close to 16,000 consumers in the United States. The study included a companion survey of 500 consumers in the United Kingdom. Respondents ranged in age from 18 to 75 with reported household incomes ranging from less than $20,000 to more than $201,000 per annum.

The research is part of a broader multi-year global initiative, the Unisys Trusted Enterprise Index. The TEI will serve as a comprehensive tool for companies and governments to better redefine their own security and business processes for greater impact and visibility into the cause and effect relationships between business and technology goals and how they serve customers.