Securing Customers' Confidence in Online Banking

By Tom Schmidt

How much of an impact are today's cyber threats having on customers' confidence in online banking? Consider the following developments:

• According to a recent Gartner Inc. survey, 53% of Internet users say they've stopped giving out personal information to Web sites because of concerns about identity theft.
• 14% of Internet users have stopped paying bills online and 4% have stopped banking online altogether.
• According to a Harris Interactive study, 71% of consumers say they are "uncomfortable" providing personal information online.
• A recent Financial Innovations survey found that the yearly household growth rate of online banking is expected to fall from 7% in 2007 to 4% in 2010.

But eroding confidence isn't the only story. Customer loyalty appears to be impacted as well. The most recent Consumer Survey by Financial Insights found that almost 10% of the average bank's most profitable customer segment has switched banks because of concerns about identity theft.

In broad strokes, IDC summarizes the current state of online banking as follows:

• Banking customers expect their institutions to fix the problem.
• Most believe it's the institution's responsibility to protect them.
• Most believe some of the responsibility also falls on them.
• Many are willing to add software to improve security.
• Given this environment, what can banks do to take back control and restore confidence?

Introduced in late 2006, the Secure Internet Banking Alliance (SIBA) is a program that enables online financial institutions to collaborate in combating a common foe: threats to online transaction security. By joining SIBA, financial institutions can gain an enhanced barrier to online security risks to protect their reputation. Ultimately, SIBA membership enables member institutions to mitigate perceived online security concerns and restore consumer confidence in online financial activities.

Financial institutions participating in the Secure Internet Banking Alliance are committed to ensuring that customers know they are on a legitimate site; those logging in are actually customers; and confidential information and transaction streams are not hijacked by crimeware.

Conclusion
Recent studies show that fear of identity theft continues to contribute to a slowdown in online banking. In addition, the latest Internet Security Threat Report found that nine of the top 10 phished brands in the first half of 2006 were in the financial services sector. As a result, financial institutions are under intense pressure to provide security and confidence to their customers.

Through membership in the Secure Internet Banking Alliance, financial institutions are able to incorporate multiple layers of protection benefiting both the consumer and the bank. Consumers are protected against the threat of online fraud, strengthening their confidence in online transactions, and banks are able to enhance the security and authenticity of their communication with customers.

Tom Schmidt writes frequently about information security topics. He has more than 15 years' experience as a writer and editor in high-tech publishing.