US consumers will switch banks for greater fraud protection

US consumers will switch banks for greater fraud protection

Nearly half of US households would be willing to switch their accounts to financial institutions that offer stronger theft detection and alert services, according to research conducted by Unisys.

The study found that one in five US households - more than 21 million consumers - have been directly affected by identity theft.

Despite this, overall trust in financial institutions remains high, with 84% of consumers believing their banks are doing all they can to prevent identity theft.

But more than half of those surveyed are worried about the safety of their money. Nearly two-thirds of consumers believe it is possible for banks to prevent fraud before it occurs, and more than three-quarters (78%) believe it is a bank's responsibility to do so. But consumers are not enthusiastic about bearing the cost of identity theft protection, with only 27% at least somewhat willing to pay extra for these services.

Gary Cawthorne, vice president and managing partner of global banking at Unisys, says banks put themselves at a competitive disadvantage if they don't offer and aggressively market their ID theft protection services.

"People clearly look to their banks for leadership on this important issue. Unless banks take stronger actions, customer trust - the life blood of every financial institution - will seep away," he says.

A separate Unisys study found that branch staff at the top 100 US banks are unclear about the protective measures their institutions take to deter ID theft. Only 14% said their institution had a dedicated department monitoring account activity, while 15% said their bank didn't do anything special at all to prevent ID theft. Just one percent of respondents said their bank provided special identity theft training for staff.

Says Cawthorne: "Unless banks better train their front line on identity theft, they risk substantial damage to their reputation. People often look first to their branch for advice, and banks are missing out on a powerful tool for customer retention."

"As financial institutions continue to invest in branches around the world, they risk losing the trust customers put in their brand, or worse, losing customers to financial institutions that more holistically combat fraud."

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