Gulf between consumers and banks on ID theft
Gulf between consumers and banks on ID theft
Nov 10, 2004: Banks are at risk of a customer exodus as a result of growing consumer awareness of identity theft issues, according to the results of new research by Unisys.
The study, which consisted of a random telephone poll of 1000 consumers and a "mystery shopper" study of bank branch service representatives comprised of new account inquiry conversations with approximately 300 branch customer service representatives, found that nearly half of those polled said they would be willing to switch their accounts to financial institutions that offer stronger theft detection and alert services.
Banks face mounting pressures not only to improve identity theft prevention, but also to help customers better understand how they can combat fraud. While trust in banks remains high (84 percent of consumers believe their banks are doing all they can to prevent identity theft), the Unisys research points to rising fears: more than half of those surveyed are worried about the safety of their money. The study found that one in five of those questioned had been directly affected in some way by identity theft.
"Banks put themselves at a competitive disadvantage if they don't offer and aggressively market their ID theft protection services," said Gary Cawthorne, vice president and managing partner of global banking at Unisys, which works with groups such as the Financial Services Technology Consortium in addressing identity theft. "Unisys research shows that people clearly look to their banks for leadership on this important issue. Unless banks take stronger actions, customer trust - the life blood of every financial institution - will seep away."
The study also found that nearly two-thirds of consumers believe it is possible for banks to prevent fraud before it occurs, and more than three-quarters (78 percent) believe it is a bank's responsibility to do so. Consumers, however, are not enthusiastic about bearing the cost of identity theft protection, with only 27 percent at least somewhat willing to pay extra for these services.
Despite consumers' strong beliefs in their financial institutions' ability and responsibility to prevent fraud, a separate Unisys study of branch service representatives raises questions about what protective measures banks take, and how financial institutions communicate their identity theft prevention to customers. While most branch representatives say their banks do take actions to deter identity theft, specific knowledge of these measures is unclear. Only 14 percent say that their institution has a dedicated department monitoring account activity, and 15 percent say their bank does not do anything special to prevent theft. A mere one percent report that their bank provides special identity theft training for employees.
Identity theft customer education offered by banks appears equally low. Fewer than 10 percent of branch representatives mention having special identity theft collateral to give to customers, and only three percent cite any offers or promotions around identity theft or security. When it comes to one of the simplest measures of protection, only three percent suggested that the customer contact a credit reporting agency.
"We've found an interesting disconnect between consumers' apparent trust in their banks and their banks' ability to communicate their fraud protection policies," Cawthorne said. "Unless banks better train their front line on identity theft, they risk substantial damage to their reputation. People often look first to their branch for advice, and banks are missing out on a powerful tool for customer retention. As financial institutions continue to invest in branches around the world, they risk losing the trust customers put in their brand, or worse, losing customers to financial institutions that more holistically combat fraud."
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