Identity Theft Fears Rise as Online Banking Grows

A new study from Yahoo! shows that the Internet has taken over from the high street for consumer banking. However, separate surveys from TNS and Gartner suggest that increasing concerns about identity theft could slow down the Internet banking and shopping boom.

More than 13% of US Internet users say they or a member of their household has been a victim of identity theft, according to the latest quarterly Consumer Internet Barometer, a 10,000-household survey from TNS NFO and business organisation The Conference Board. It found that almost three in five Internet users are extremely concerned about the security of their information when conducting financial transactions online, and around half are equally concerned when shopping online.

The study says that most consumers, particularly those over 55, are more concerned about security than they were a year ago, and that these growing worries have led many people to change their online habits. Nearly 70% of Internet users have installed additional security software, and 41% are purchasing less online.

Similarly, Gartner's latest study of 5,000 US adults shows that confidence in online commerce and banking is waning, with nearly a third of respondents 'extremely concerned' that they will suffer identity theft. The survey found that 73% of people regularly log on to online bank accounts, and 63% pay bills online. However, nearly 30% of these online bankers said that security fears have influenced their behaviour. More than three-quarters of this group now log on less frequently, and nearly 14% have stopped paying bills online.

'Consumers have taken steps to be more cautious, which is a good thing,' says Lynn Franco, Director of The Conference Board's Consumer Research Center. 'The downside is the negative impact to online retailers that may slow the growth of e-commerce.' According to Avivah Litan, VP and Research Director at Gartner: 'Companies need to take steps quickly to beef up online security. They cannot rely on the Internet to lower costs and improve marketing efforts indefinitely if consumer trust continues to decline.'

Meanwhile, a US study from Yahoo! and marketing network OgilvyOne Worldwide paints a more positive picture, focusing on the fact that the increase in online banking is helping to empower consumers. The study, based on an online survey of 2,687 respondents by Forrester together with depth interviews by Flamingo International, states that 64% of people (72% of those under 40) now check their bank balances primarily online. The research found that 74% of people banking online feel more in control of their finances. In addition, around a third of respondents stated that the availability of financial information on the net makes it easier to make financial decisions and to switch providers.

The web sites for the companies mentioned are as follows:
www.conference-board.org
www.tns-global.com
www.gartner.com
www.yahoo.com
www.ogilvy.com/o_one
www.forrester.com
www.flamingo-international.com

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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