Every day it seems information security is ruling the headlines; Americans are (perhaps understandably) feeling insecure about the security of their financial information. In fact, according to a new survey from MasterCard, a majority (77%) are anxious about their financial information and social security numbers being stolen or compromised. This fear runs so deep that consumers are less concerned about having their e-mail hacked (62%) or their home robbed (59%), but perhaps most shocking is that 55% would rather have naked pictures of themselves leaked online than have their financial information stolen.
These results were echoed in a similar survey fielded on the website for NBC’s “Today” show, where 57% said they’d rather have nude photos leaked online vs. 43% who chose their bank password. Another survey at Consumerist.com also found similar results: 70.6% are more worried about having their financial information stolen than having naked photos of themselves posted online (29.4%)
Data security has become an increasingly serious concern for pretty much everyone, as several government agencies and major companies have been victims of highly-publicized breaches. There have already been 411 known data breaches in 2015, comprising almost 118 million records. That’s on top of 761 breaches (85.6 million records) from last year. The Identity Theft Resource Center says there have already been 40 significant data breaches in the banking and financial sector this year, including hacks at Citibank, Capital One, TD Bank, M&T, Regions, and BB&T. Credit unions are not immune either. Virginia Credit Union, Piedmont Advantage Credit Union and Fort Campbell FCU are among those financial institutions who have suffered data breaches so far this year.
The good news is that Americans are eager to take an active role in protecting their financial information, few may recognize the everyday habits that could be putting them at high risk.
About half (48%) of consumers believe they are most responsible for protecting their own financial information from being stolen or comprised. 92% of Americans feel they take precautions to protect their financial information, yet roughly half (46%) rarely or never change passwords for online financial accounts. 44%use the same password for multiple online accounts, and more than a third (39%) have checked their financial data online on public networks.
“There’s a sharp contrast between what people say or think they are doing to protect their information and what they actually do, but that’s understandable – we’re human,” said Carolyn Balfany, SVP of U.S. Product Delivery at MasterCard. Today’s digital lifestyle means consumer concerns for online safety and security trumps physical security as a close second. It’s great that consumers have heightened awareness, but while they may understand personal responsibility they still want to feel protected by the institutions who are also responsible for protecting their data.”
Millennial Americans (45%) are least likely to believe that the risk of their financial information being stolen or compromised is going to increase in the next three years, compared to 58% of Gen-Xers and 61% of Baby Boomers.
Why This Is a Huge Issue for Financial Marketers
Security isn’t a sexy topic, but it’s of vital importance to financial institutions. While banks and credit unions may prefer to tout things like “great rates” and “more personal service,” financial institutions aren’t going to get to first base if they can’t reassure consumers about the fidelity of their financial information. People are more anxious about the security of their banking info than they are about their loan rate or mobile banking features.
According to Gemalto, two thirds (67%) of Millennials are concerned about the risks they face when using a mobile device to access banking services, and nearly half (48%) said that they would switch banks if they felt their institution’s mobile app had inadequate security protections. In fact, a quarter of mobile bankers say that a lack of confidence in the protection of their data is a top concern, while the number spikes to 60% among non-users. Nearly half (45%) of consumers who do not use online banking believe that mobile banking is “experimental” or “dangerous,” and more than a third (38%) say it is “scary.” In fact, non-users are three times as likely to say “scary.”and almost four times as likely to say “dangerous” than mobile banking users.
Reality Check: You aren’t going to get consumers to adopt your mobile and digital solutions if you can’t convince them that those channels are safe.
Security concerns affect business banking relationships too. When asked about reasons for not using online and mobile channels, 59% of businesses cite security as the main issue. Specifically, 39% were concerned with the security of online banking, while slightly more (42%) were concerned with the security of banking on mobile platforms.
40% of consumers say they hold banks responsible for security breaches, according to a study from the TNS Retail Banking Monitor. That’s up from 33% from June 2013. 37% percent of those surveyed also said that their bank wasn’t doing enough to prevent cyberattacks, up four percentage points from the previous year.
According to a poll from Entersekt, 71% of U.S. adults would be at least somewhat likely to switch to a different bank if they became a victim of online banking fraud at their current bank.
Cyberattacks are on the rise, and this is bad news for banks and credit unions that are unprepared.
“Over the next decade, as cyberattacks continue to escalate, data security could become a key factor when customers decide whether to switch institutions,” observes Kevin Tynan, a notable bank marketing expert and regular contributor to The Financial Brand. “If your financial institution lacks a carefully considered security communication plan — in addition to a muscular security program — you could start losing customers.”
“Rather than spouting platitudes about your commitment to protecting consumer data, increase message credibility,” Tynan continues. “Discuss common security technology such as firewalls, spyware and malware detection, intrusion detection tools and encryption practices. The goal is to give customers enough information to build trust with them, but not enough to help hackers.”
Bottom Line: The disparity between how important security issues are to consumers and the amount of energy financial institutions put towards easing consumers’ fears couldn’t be more great. Whenever you’re marketing online, mobile and other digital services, you must address people’s fears by stressing security features.