Does your financial institution really know — and care about — the fears that keep your customers awake at night? Identity theft and bank fraud are high on the list of worries for the average American consumer; in fact, more of them worry about falling prey to identity theft than they fear being a victim of terrorism, a survey by FICO reveals.
Forty-four percent of those surveyed by FICO said identity theft and banking fraud were their top concerns. Just 18 percent said they most feared terrorism, and only 22 percent were most afraid of their own death or the death of a loved one.
The FICO survey illustrates how high identity theft and fraud risks have risen to the forefront of consumers’ awareness. Do you really understand how your customers feel and think about identity theft and bank fraud? More importantly, do you know what your customers will think of your financial institution and its response when fraud happens?
Guilt by association
Financial institutions go to great lengths to thwart fraud, and let’s be honest — their primary motivation is to avoid the business costs associated with fraud. However, when fraud occurs, it doesn’t just cost the financial institution money; it can severely impact the financial well-being and even quality of life for victimized customers.
Unsurprisingly, consumers have a visceral reaction to events that threaten their financial health and peace of mind. When they experience fraud or identity theft through a breach in any company’s cybersecurity, consumers will also extend their emotional response to the company they deem responsible — whether it’s their financial institution or their favorite florist shop.
It’s not enough for financial institutions merely to take steps to prevent and catch fraud. They must also act to help customers recover financially and emotionally when fraud and identity theft occur.
Opening the window
Fortunately, ample research exists to help companies, including banks and credit unions, understand how consumers feel about identity theft, and what they know and don’t know about it. Here are five things financial institutions should know about consumers and identity theft:
- They may blame you.
Seventy percent of consumers surveyed for Gemalto’s 2016 Data Breaches and Customer Loyalty Report said they hold companies responsible for protecting customer data, Infosecurity magazine reports. Whether the fraud occurs because of something your financial institution did or failed to do, or it was the result of a malicious attack that managed to overcome your defenses, there’s a good chance affected consumers will hold your financial institution responsible. In fact, 58 percent of consumers said they would discontinue their relationship with a bank because of a data breach that exposed their personal information.
- They may leave, and even if they stay, things will never be the same.
In the Gemalto survey, 58 percent of consumers said they would discontinue their relationship with a bank because of a data breach that exposed their personal information. FICO found that a quarter of account holders closed their bank accounts after a fraud incident. The Identity Theft Resource Center reports that 28 percent of bank customers and 12.3 percent of credit union members who were victims of account fraud switched financial institutions as a result.
While an Experian study on the aftermath of a data breach found that most breached consumers don’t decamp, it’s not because they’re largely satisfied with the company’s response. Rather, 71 percent stick around because switching their business to another company is just too difficult, Experian found.
- Pessimism is rampant.
More than half (58 percent) of consumers believe they will experience data theft at some point in the future, according to Gemalto’s survey. Sixty-one percent of consumers surveyed by Experian said they believe data breaches are unavoidable because they affect all companies.
Multiple surveys show that when consumers have been involved in a data breach, their fear of falling victim to identity theft increases significantly.
What’s more, “data breach fatigue” is a real and growing problem. People are just tired of hearing about it. The desire to avoid thinking or hearing about something that frightens us is an unfortunate reality of human nature. So while consumers may be very afraid of identity theft, they still don’t want to hear about it. In fact, Experian found that among those who had received a data breach notification, the top response was to do nothing at all about it.
- The devastating effects of fraud and identity theft go far beyond financial.
The ITRC survey paints a stark picture of just how bad identity theft can be for consumers. Survey respondents reported significant negative emotional effects, such as frustration, fear, rage and feelings of powerlessness.
People whose identities were stolen in order to illegally claim a tax refund fared particularly poorly; more than half had to borrow money from family or friends to cover their financial needs, and nearly half said they went without necessities because they couldn’t meet their financial needs. Respondents lost time from work and school, had to borrow money or otherwise rely on family and friends for help, and some even had relationships end because of the identity theft.
- Your financial institution’s response could make all the difference.
Across virtually every survey that asks compromised consumers a variation of the question, “What would make you stay/why did you stay after an incident?” the answer is universal: Take care of me. Consumers, including bank customers, feel that breached companies are responsible for helping affected consumers recover from fraud and identity theft. They want help in the form of clear and transparent communication about the incident, plus free credit monitoring and identity theft protection services. When they receive this kind of support from their financial institution, they’re more likely to view their bank positively and keep their business in place.
What consumers want
When fraud or identity theft occur, customers want support and protection from their financial institutions. By offering identity theft prevention services and credit monitoring, as well as phone support, financial institutions can help mitigate the negative effects of cybercrime — for themselves and their customers.