When it comes to online banking, if you ask, "what's trust got to do with it?" — the answer would be "everything." Indeed, a recent study by the Ponemon Institute, a privacy think tank based in Tucson, reveals that customers who have a high level of trust in their banks are much more likely to perform various online banking tasks, such as automatic bill paying or applying for new products or services. Furthermore, the study demonstrates that these customers are more apt to remain loyal to the banks they trust.
The study, titled the 2005 Privacy Trust Survey for Online Banking, shows that 55% of consumers with a high level of trust in their banks show loyalty by not visiting the Web sites of other banks to learn about competing products and services. Still, loyalty can be lost easily. In fact, 57% of consumers with the highest level of trust would take their banking business elsewhere if their primary bank suffered only one privacy breach. Ouch.
Thus, not only do consumers expect that their banks have safeguards in place to protect them from perils such as identity theft, if those safeguards do not get the job done, the consumers will walk. The good news is that right now 70% of survey respondents strongly agree or agree that their banks are committed to protecting their personal information.
Convenience is reported by 71% of respondents as being the chief reason for using online banking services instead of conventional banking. And 59% stated that they have more confidence in online banking than branch banking. The study reasons "combining convenience with confidence is a win-win situation for financial institutions with the potential of adding more online customers." This may be the case, as currently 53% of respondents already do bank online.
As to ways banks could increase trust in their ability to protect personal information with respect to online banking, the top three responses were: 1) setting limits on sharing of personal information with third-parties; 2) using less advertisements or Web site promotions; and 3) implementing solid identity verification procedures with customers.
The primary online banking activities engaged in right now by respondents are: 1) viewing account information; 2) making payments on products they have with the bank, such as a home mortgage; and 3) making payments to other companies.
Only 21% of respondents wish to receive emails from their banks. And 82% rank identity theft as their greatest concern in the event of a breach of or violation of their personal information.
No doubt, the time for online banking has come, and trust truly matters.
Eric Sinrod is a partner in the San Francisco office of Duane Morris (www.duanemorris.com), where he focuses on litigation matters of various types, including information technology disputes. His column appears Wednesdays at USATODAY.com. His Web site is www.sinrodlaw.com, and he can be reached at . To receive a weekly e-mail link to Mr. Sinrod's columns, please send an e-mail with the word Subscribe in the Subject line to .
Reprinted here with permission from USAToday.com.