Online Banks have Phood for Thought
November 26 2003
'Phishing', the recent and potentially massive email fraud conning Britons into revealing their banking information through fake web sites, was effectively nipped in the bud through rapid action and wide publicity by most online banks. However, some potential users have been deterred and there are lessons to be learned about using the media to alert customers, according to NOP Financial.
Around 8m people in the UK - 32% of the Internet population - actively manage an online bank account, according to NOP World's Financial Research Survey (FRS), in Sept 2003 ('Actively' means using on a monthly basis). Online banking has taken off rapidly in the last two years and the FRS has shown that it enables banks to drive greater customer satisfaction and improve customer retention, so it was important to react appropriately to Phishing.
Banks used individual customer contact, media coverage and in Halifax's case the more drastic policy of actually closing down the Internet banking service, to make customers aware of the fraud. A specific research project by NOP Financial this month shows that for the most part this was successful:
- around 80% of those using online banking say that they were aware of the scam and were satisfied with the way their bank reacted
- most (80%) were made aware by their own bank
- 81% said that it made no difference to their feeling about the security of online banking
- the 'Phishing' email only reached the 'In Boxes' of 12% of respondents
However, this leaves a significant minority of online bankers dissatisfied. One in five online bankers who heard nothing are less happy with their bank as a result - and not all banks reacted as well as others.
More than half the customers of the biggest offender were either unaware of the scam or did not receive any communication from them at all. Nearly half (46%) who received nothing from their online bank said they were dissatisfied with the way the bank had acted, and almost a third (29%) of them say that they feel less secure about online banking as a result, compared to only one in ten (12%) of those that did hear from their bank. One of the questions online banks will be asking is whether showing information about the scam as users log-in is good enough, especially for those new to the service or less frequent in their usage.
It could be argued however that existing online banking users are not the biggest problem in terms of fallout from 'Phishing', given that they are already familiar with the procedures and in many cases comfortable with the technology generally. Such problems may worry them but not change their behaviour, whereas they may put off altogether an estimated 9m 'potential online bankers' - defined by NOP as those online who don't reject the idea of online banking but don't currently use it.
Of potential users, almost half (47%) heard about 'Phishing'. The banks' reliance on the media to inform people about Phishing 'did more to hinder than encourage future take up' according to NOP. 57% of all Internet users and 79% of those not currently doing their banking online said they heard about the scam via the media, and the way the scam was reported may not have improved the likelihood of these consumers signing up in the near future: 61% said they feel less secure about online banking as a result of hearing about Phishing.
Scams like Phishing are something that online banks may simply have to get used to dealing with - but they must also learn lessons from such threats and from the success of different methods of informing people about them.
NOP World Financial interviewed 2000 weekly Internet users between Nov 14 and Nov 21, using the group's ePanel.
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.
