29 May 2017
Visit EBAday.com

Security fears scare off US customers from online banking, shopping

27 November 2006  |  11618 views  |  0 Man holding Tablet computer

Nearly $2 billion in US e-commerce sales will be lost in 2006 due to consumer concerns over the security of the Internet, according to a survey by Gartner, which also found that fear of fraud and identity theft have prevented around 33 million US adults from banking online.

The survey of 5000 online US adults in August 2006 found that recent security breaches - both online and offline - are having a significant impact on buying patterns and use of Web banking facilities.

Nearly half of those surveyed (46%) said concerns about theft of information, data breaches or Internet-based attacks have affected their purchasing payment, online transaction or e-mail behaviour. Of all the behaviors affected, online commerce - which includes Internet banking, online payments and Web shopping - is suffering the most.

Almost nine million US adults have stopped using online banking, while another estimated 23.7 million won't even start because of fears over security.

Garnter estimates that approximately $913 million in e-commerce sales was lost in 2006 because of security concerns among online shoppers. The analyst group says another $1 billion was lost from consumers who refuse to shop online because of security worries.

Avivah Litan, vice president and distinguished analyst at Gartner, says financial institutions and e-commerce providers need to beef up security to retain customers, but they must be careful to keep the added measures convenient.

"A layered approach to solving security problems is the most effective," says Litan. "Companies should implement back-end fraud detection, stronger user authentication (beyond single factor passwords), transaction verification for high-risk transactions, and data masking/truncation of sensitive data that is shown on Web-based screens."

The research also shows a growing consumer distrust of e-mail. Nearly 70% of online consumers whose behaviour has been affected by recent security breaches say their concerns have affected their trust in e-mail from companies they don't know personally. Of these, more than 85% delete suspect e-mails without opening them.

"This figure has serious implications for banks and other companies that want to use the e-mail channel to communicate more cost-effectively with their customer base," says Litan.

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Phishers angling for fatter fish

Phishers angling for fatter fish

10 November 2006  |  7914 views  |  0 comments
US customers trust banks to guard their data, says ABA

US customers trust banks to guard their data, says ABA

25 August 2006  |  8193 views  |  0 comments
Gartner calls on banks to adopt Web 2.0 technologies

Gartner calls on banks to adopt Web 2.0 technologies

15 August 2006  |  21535 views  |  0 comments
Fraud fears scare off US Web shoppers

Fraud fears scare off US Web shoppers

23 May 2006  |  7479 views  |  0 comments
Fraud fears scaring off Canadian Web banking customers

Fraud fears scaring off Canadian Web banking customers

12 April 2006  |  7482 views  |  0 comments
Data security fears outrank terrorism, environmental concerns  - Visa

Data security fears outrank terrorism, environmental concerns - Visa

25 January 2006  |  7061 views  |  0 comments
Security fears scare off US Web banking customers

Security fears scare off US Web banking customers

09 November 2005  |  6933 views  |  0 comments
Fraud fears hitting online shopping

Fraud fears hitting online shopping

19 October 2005  |  8516 views  |  0 comments
Phishers exploiting lax ATM security - Gartner

Phishers exploiting lax ATM security - Gartner

02 August 2005  |  8810 views  |  0 comments
ID theft fears hitting online banking

ID theft fears hitting online banking

24 May 2005  |  8927 views  |  0 comments
Phishing scams cost US financial firms $1.2 billion - Gartner

Phishing scams cost US financial firms $1.2 billion - Gartner

07 May 2004  |  9419 views  |  0 comments

Related blogs

Create a blog about this story (membership required)
Visit www.capgemini.com/worldreportsvisit www.niceactimize.comDownload the paper now

Top topics

Most viewed Most shared
BBVA launches Open API marketplaceBBVA launches Open API marketplace
14895 views comments | 54 tweets | 82 linkedin
Bank/fintech collaboration can take transaction banking to new heightsBank/fintech collaboration can take transa...
8313 views comments | 12 tweets | 24 linkedin
R3 raises $107mR3 raises $107m
7879 views comments | 17 tweets | 16 linkedin
TransferWise launches multi-currency business bank accountsTransferWise launches multi-currency busin...
7695 views comments | 13 tweets | 22 linkedin
Digital payments to drive social justiceDigital payments to drive social justice
7687 views comments | 24 tweets | 12 linkedin

Featured job

Six Figure Base + Commission + Stock Options
London

Find your next job