Consumer Trust: Still A Major Issue

Consumers have been regularly engaging in online transactions that involve personal finances for many years now—shouldn’t we be able to trust in the process by now?

Apparently not, if the report “2011 State of Online and Mobile Banking,” just out from comScore, is any indication. The report has many positive signs that should cheer the industry, but there are also some negative indicators that deserve attention.

The area commonly categorized as Personal Financial Management (PFM) is clearly an important one for most financial institutions—it enables each company to engage with their customers on a more personal level and subsequently derive more revenue. That’s why most FIs across the board offer a range of tools to help consumers do business online with speed, convenience and safety.

However, even with awareness of these options, adoption is undeniably low. Half the customers of Bank of America and Wells Fargo know that these banks offer a range of online PFM tools, but that hasn’t translated into usage—adoption hovers at only 12 percent and 6 percent respectively. With greater education regarding functionality and usage, there’s tremendous potential here for growth.

Going one level deeper into online bill pay, there’s definitely good news: nearly 66 percent of the customers surveyed use this capability, and the number is still growing. However, there was 19 percent year-over-year growth in 2010, but an anemic 2 percent rise last year. Consumer habits are also far from settled, with most using a variety of institutions—banks, third-party providers, credit card issuers. Given the value of these services in better engaging customers, there’s definitely scope for major enhancements.

In addition to sufficient awareness and adoption, security remains a core concern—in fact, it’s the single most important reason why more consumers don’t pay their bills online. More worryingly, these concerns are growing—the comScore report shows that consumer fears actually jumped by 14 percent over 2010.

Given the considerable resource most institutions have dedicated to building their defenses, the natural reaction is to dismiss these concerns as unfounded. However, it’s important to remember that even for the tech-savvy generation, security is a visceral issue. Consumers don’t generally turn to analyst reports to see which institutions have implemented the best firewalls or the most effective data encryption technologies—they respond to word-of-mouth, advertising, and media coverage of high-profile data breaches.

The comScore report also indicates that good education can be effective—nearly a quarter of the survey respondents reacted positively to good, accessible information provided by their FI about security measures.

There’s no question that each institution can gain a significant competitive advantage by effectively using an array of personal financial management tools to engage and build a lasting relationship with every customer. Those customers can in turn benefit from the speed, convenience and safety afforded by the tools available.

However, there’s clearly a gap between what’s doable and what’s being done. The only way we can bridge it is by getting the message out more effectively.

 

Written by Banking.com Staff