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Identity Theft Fear Damages Banking Profitability

Posted on May 28, 2007 by Tom Fragala

I got this article in FinanceTech via the Javelin blog.  A study was done by Javelin which reports that the banking industry is leaving $8 billion on the table because over tens of millions of US consumers don’t bank online because they fear ID theft.

For fear of becomming the next victim of identity theft, 150 million U.S. consumers don't bank online, according to experts. But the banking industry could improve profitability by as much as $8.3 billion per year if banks build consumers' confidence in online security, according to the TriCipher Consumer Online Banking Study, conducted by Javelin Strategy & Research (Pleasanton, Calif.) for TriCipher, a Los Gatos, Calif.-based authentication solutions provider.

The study, which was based on online survey responses from 3,349 U.S. adult consumers, reports that 31 million customers would feel safe enough to begin banking online and another 39 million online users would increase their online banking activity if their banks offered free identity protection software. Further, while only 6 percent of survey respondents have been victims of identity theft or fraud, 41 percent -- which translates to more than 88 million U.S. online banking customers -- would change banks or reduce their online service usage if their individual institution was compromised by a data breach, the study says, making identity protection a significant competitive differentiator.