Impact of Identity Theft on Banking Relationships
Financial Insights has announced the release of a new report titled "Consumers Speak About Identity Theft: Does Perception = Reality for U.S. Banks?" examining consumer perceptions of identity theft and fraud that explores how consumers are adjusting their behaviors regarding low cost self-service channels to protect themselves from the crime.
The report analysis shows that 53% of consumers are still worried about identity theft even though financial institutions and merchants have taken extensive measures to restore consumer confidence.
Findings from the survey include:
- Consumers have ceased behavior they perceive as risky, particularly providing personal information online
- Identity theft victim rates have leveled across the U.S. compared to 2005 when the West Coast experienced rates double the national average
- The number of consumers that said they would switch banks to reduce risk is higher now than just two years ago
"It is critical that banks understand the behaviors of consumers facing identity theft fears in order to develop effective data security strategies and mitigation plans," said Karen Massey, senior analyst for Consumer Banking and Credit and author of the report: Consumers Speak About Identity Theft: Does Perception = Reality for U.S. Banks?. "The issue of identity theft is dissuading consumers from using self-service channels, and costing banks $50 billion annually in consumer reimbursements for fraudulent activity."
There is no good news here for banks that hope to entice consumer to embrace low-cost self-service channels. An average of 8.6% of consumers surveyed (up from 5.7% in 2005) stated they would switch banks to reduce the risk of becoming a victim of identity theft. An additional factor at play is that consumers ages 34 and under tend to be less loyal to one institution.
"Financial institutions must recognize the inherent fickleness of this generation, particularly when security is a factor, and develop strategies to attract, but more importantly, retain these customers. Ensuring a safe online environment is essential to this highly sought-after group of consumers," Massey states.
The report goes on to advise bankers to recognize consumer sensitivity to identity theft and continue to ensure a safe environment to attract and retain highly sought after customers who would be enthusiastic users of convenient self-service channels.
Add your comment... (note that all comments are reviewed before they're published)