Banks Hold the Key to Online Trust

Michael Singer

Updated · Aug 16, 2001

Online consumers looking to move their shopping and finances online have two choices: They can try to remember an increasing amount of user names, passwords and personal information, or they can go the route of a digital wallet-type service. In the end it comes down to who you trust.

The security of personal information has been a major stumbling block to the adoption of e-commerce, financial services and even online services designed to make consumers' lives easier. A number of companies have made bids to become wardens of personal information online, but research from Jupiter Media Metrix found consumers may be unlikely to trust anyone but the offline brands they already trust — namely, their banks.

The next company expecting to grab a share of the personal data storage business is Microsoft, which expects that its XML-based Hailstorm concept can become a trusted central store and standard means of exchanging personal information (from address books to credit card information) in five to 10 years. According to Jupiter Media Metrix, banks must work to take advantage of the consumer trust they hold by developing a pan-bank trust where no single bank holds the technology, but rather it is shared by its members.

As it stands now, Jupiter found that veteran Internet users trust banks and online merchants the most with personal information. A May 2001 Jupiter Consumer Survey found that 60 percent of consumers are not familiar with the concept of digital wallets, and since no portal or ISP has become a trusted consumer information brand, that leaves the door open for Microsoft to wait out the market.

According to Jupiter, 36 percent of online veterans (five or more years online) have stored personal information (other than name, address and zip code) with merchants, compared to only 12 percent of new users (less than one year online). Thirty-one percent of veterans have stored such information with banks, compared to 13 percent of new users.

Companies Consumers Trust
With Personal Information

Merchants 36% 12%
Banks 31% 13%
ISPs 18% 27%
Credit Cards 25% 11%
eBay 22% 12%
Yahoo! 16% 15%
MSN 9% 6%
None 34% 44%
Internet veterans have 5 or more years online
Newbies have one year or less

Source: Jupiter Media Metrix

How important is the easy access to such personal information and its security to the development of the Internet and its consumer applications? According to a report by Gartner, Inc.‘s GartnerG2, approximately 60 percent of online adults say security and privacy concerns stop them from doing business on the Web. In addition, more than 50 percent of those who buy on the Web say they'll enter their information, but admit they aren't comfortable about it.

And banks generate even more concern, at least when it comes to personal financia information. Eighty-six percent of online American adults are very concerned about the security of bank and brokerage account numbers when doing online transactions. Almost as many, 83 percent, expressed the same concerns about the security of their Social Security and credit card numbers. Additionally, 70 percent are very concerned about the security of their personal information, including their income and assets, according to Gartner.

“Even though many consumers say they're uncomfortable sharing information on the Web, for the right combination of convenience or reward, many go ahead and share anyway,” said GartnerG2 research analyst Laura Behrens.

Not helping matters are high-profile hacking incidents, as well as a general lack of familiarity about methods to ensure security, which contribute to low consumer confidence in the security of online transactions. Only about half of Americans who use the Internet also use it to buy goods and services, and according to Gartner, online marketers may bring part of the remaining half into the online channel by promoting their privacy and security features just as much as the convenience of Web transactions.

“Companies must demonstrate their security and privacy concerns to users by prominently posting their privacy policies and third-party audit results,” Behrens said. “In addition to protecting customers' privacy and the security of their information, Web marketers must promote the fact that they do so.”

Gartner's report states that demonstrated vigilance in protecting consumers' information will become a competitive requirement on the Web, and until industry standards for authentication and secure payment methods emerge with higher awareness, consumers will continue to be wary of Web transactions.

“Our studies found that 20 percent of adults who say they have placed an order on the Internet in the past three months also say they won't put personal information such as their name and address on the Web,” Behrens said. “Not all these people have faulty memories — some have become so comfortable at certain sites that they no longer consider doing business there as requiring an exchange of personal information.”

Reprinted from CyberAtlas

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    Michael Singer

    Michael Singer is a career coach, podcast host, and author to help you step into a career you're excited about. Currently, He is a coach and trainer helping entrepreneurs and executives achieve business and leadership success. He is also an award-winning business journalist focused on the intersection of technology, Big Data, Cloud, SaaS, SAP, and other trending technology.

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