ID theft worry adds up to opportunity for ‘trusted’ banks

Majority of bank customers consider biometrics to safeguard identity, says survey

Banks can enhance their reputation for security by acting as custodians for personal identity credentials designed to make identity theft difficult.

This idea was advanced by Graham Alston, a partner in Unisys’ global financial services division, when he addressed conference of the Financial Services Institute of Australasia, held in Wellington in last week.

Last year, Unisys conducted a worldwide survey on identity fraud. This was then followed up with a survey designed to elicit the public’s perception of how identity issues were being managed.

Two prominent findings were that most customers of financial institutions expected the institution concerned to take the responsibility for detecting, preventing and remedying identity fraud, and that banks are the most highly trusted organisations when it comes to issuing multi-purpose identity credentials.

In this respect, they are ahead of government agencies, which have taken the initiative on ID matters in New Zealand, and the police and tax authorities. The police are mistrusted when it comes to ID custody in both North America and Latin America, although somewhat more trusted in the Asia Pacific region. Tax authorities scored negatively on trust in all regions.

Identity theft is shaping up as a big public worry. To some extent this worry is substantiated by experience. An average of 11% of bank customers in all regions report having been subjected to some form of identity theft. The figure for the US is 17%.

Asked how much they worried about becoming a victim, 66% of people, on average, say they are “a little worried”. However, in Mexico and Brazil 78% and 70% of people, respectively, worry “a lot” about this possibility.

In most countries concern is greatest among the middle-aged and financially prosperous — precisely those customers the banks would be least happy losing. Of course, the loss to a bank of any identity-theft scandal would also be to its overall reputation, as well as loss of customers, says Alston.

The two surveys also show there is relatively little public resistance to giving up personal data, including biometrics, if this is the price of greater security against identity theft. In North America 71% of customers said they would consider using biometrics to safeguard their identity. The figure for the Asia-Pacific region was 68%.

If they take this trust and interest seriously banks have an opportunity to “convert a bottom-line loss into a top-line benefit”, says Alston. However, any bank response must not be limited to just technology — good marketing and communication, and the sensitive management of any problems are also important.

At present, Alston says, many customers experience a very negative attitude from their bank when they report a possible fraud. “You’re almost treated as the guilty party until you prove you’re innocent,” he says. This is something banks will have to change, he says.

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