2017: The Year of Anxiety for Consumers and Cyber Security

By Karen Wheeler, UK Country Manager at Affinion

 Last weekend marked Data Privacy Day (28^th January), a day that was initially set up in 2007 and is held every year to raise awareness of data protection issues. But, if 2016 showed us anything, it is that cyber threats are everywhere, with scare stories hitting the headlines on almost a daily basis from major brands, including cases involving Tesco Bank, Netflix and Yahoo, to name just a few.

Karen Wheeler

Awareness of this issue is high and 2017 is being dubbed the ‘year of anxiety’as concerned consumers search for greater protection from hacking and fraud.Financial services providers have traditionally lead the charge, investing a great deal of time and money in fraud and data protection, but, in an age where consumers are increasingly cynical, can banks play a larger role in helping their customers protect themselves? And can this bring about an increased sense of loyalty for the bank’s brand?

 Given how sophisticated banks’ defences are, life is becoming more challenging for fraudsters so we are seeing a shift where criminals are instead focusing stealing and using ‘real’ people’s details.Criminals are seeking to take control of a person’s affairs through their online passwords or by gaining access to sensitive information via people’s social media accounts.As a consequence, privacy and data protection are increasingly in consumers’ hands. The nature of potential threats is so varied that banks’ defences are no longer strong enough to cope alone and financial services institutions can fail consider how their customers could be inadvertently weakening their defences.

With a constantly evolving fraud landscape, there is also a lack of clarity around whose responsibility it is and how to protect against fraud, which leads to dangers for all concerned. For banks, it is almost impossible to avoid reputational damage and the potential loss of customers if they fail to adequately support their customers in cases of identity fraud.

For consumers, reliance on security provided by their bank and the lack of awareness around how identity theft happens result in a failure to take responsibility for their actions online. Poor privacy practices can increase the frequency and extent of the fraud threat. A study by Telesign research found that 54% of people use five passwords or less for their online activity, meaning a fraudster can take control of large portions of an individual’s affairs relatively easily. Given that the world is increasingly reliant on the internet, it is ultimately everyone’s responsibility to try and protect it.

For financial services providers, the current situation could be regarded as a source of opportunity. They can educate consumers about the risks and steps they can take to protect themselves. While some institutions may question whether or not this is their job, given the amount of money they lose as a result of fraud, perhaps the question banks should be asking is whether or not they can afford not to address this issue?

By enabling people to make better security and fraud prevention choices that are backed up by relevant and knowledgeable support when things go wrong, they can enhance their reputation with customers. This should, by consequence, increase a customer’s bond and loyalty to their bank – as well as reduce the amount banks pay out in relation to fraudulent activity.

Secondly, banks are generally among the most trusted brands by consumers when it comes to data security which means that a great deal of goodwill and brand value already exists for financial services institutions that they are failing to maximise. It is clear that protecting information is important to consumers and so banks should be looking to evolve their propositions and capitalise on this. For example, if a bank extends its reach into a consumer’s life by providing secure data storage services to help individuals protect their digital footprint, the feeling of trust can only grow.

Of course, concerns may well exist among the banking community about going down this road, as it could lead to greater reputational damage if a data breach ever occurred. And perhaps those concerns are justified as 73% of consumers would reconsider using a company if it failed to keep their data safe, according to research by Deloitte. However, technological advancements, such as the use of biometrics in securing transactions, should help to nullify these fears – if consumers start placing greater trust with their bank and put them in control of securing their digital assets too, this will, ultimately, make the decision to change banking provider that much more difficult, an opportunity that is too great to ignore.

Clearly, as threats increase and become more complex, customers will become more anxious and will be looking for a safe haven and an extra layer of support.Perhaps the time has come for financial services institutions to look beyond the threat and instead see the challenge as a potential opportunity.An opportunity to help customers protect themselves – which automatically makes a bank’s own defences that much stronger. By placing their organisation at the centre of more areas of a person’s life, banks can, in turn, prevent customer churn and foster deeper, longer lasting relationships with consumers.

By Karen Wheeler, UK Country Manager at Affinion

 Last weekend marked Data Privacy Day (28^th January), a day that was initially set up in 2007 and is held every year to raise awareness of data protection issues. But, if 2016 showed us anything, it is that cyber threats are everywhere, with scare stories hitting the headlines on almost a daily basis from major brands, including cases involving Tesco Bank, Netflix and Yahoo, to name just a few.

Karen Wheeler

Awareness of this issue is high and 2017 is being dubbed the ‘year of anxiety’as concerned consumers search for greater protection from hacking and fraud.Financial services providers have traditionally lead the charge, investing a great deal of time and money in fraud and data protection, but, in an age where consumers are increasingly cynical, can banks play a larger role in helping their customers protect themselves? And can this bring about an increased sense of loyalty for the bank’s brand?

 Given how sophisticated banks’ defences are, life is becoming more challenging for fraudsters so we are seeing a shift where criminals are instead focusing stealing and using ‘real’ people’s details.Criminals are seeking to take control of a person’s affairs through their online passwords or by gaining access to sensitive information via people’s social media accounts.As a consequence, privacy and data protection are increasingly in consumers’ hands. The nature of potential threats is so varied that banks’ defences are no longer strong enough to cope alone and financial services institutions can fail consider how their customers could be inadvertently weakening their defences.

With a constantly evolving fraud landscape, there is also a lack of clarity around whose responsibility it is and how to protect against fraud, which leads to dangers for all concerned. For banks, it is almost impossible to avoid reputational damage and the potential loss of customers if they fail to adequately support their customers in cases of identity fraud.

For consumers, reliance on security provided by their bank and the lack of awareness around how identity theft happens result in a failure to take responsibility for their actions online. Poor privacy practices can increase the frequency and extent of the fraud threat. A study by Telesign research found that 54% of people use five passwords or less for their online activity, meaning a fraudster can take control of large portions of an individual’s affairs relatively easily. Given that the world is increasingly reliant on the internet, it is ultimately everyone’s responsibility to try and protect it.

For financial services providers, the current situation could be regarded as a source of opportunity. They can educate consumers about the risks and steps they can take to protect themselves. While some institutions may question whether or not this is their job, given the amount of money they lose as a result of fraud, perhaps the question banks should be asking is whether or not they can afford not to address this issue?

By enabling people to make better security and fraud prevention choices that are backed up by relevant and knowledgeable support when things go wrong, they can enhance their reputation with customers. This should, by consequence, increase a customer’s bond and loyalty to their bank – as well as reduce the amount banks pay out in relation to fraudulent activity.

Secondly, banks are generally among the most trusted brands by consumers when it comes to data security which means that a great deal of goodwill and brand value already exists for financial services institutions that they are failing to maximise. It is clear that protecting information is important to consumers and so banks should be looking to evolve their propositions and capitalise on this. For example, if a bank extends its reach into a consumer’s life by providing secure data storage services to help individuals protect their digital footprint, the feeling of trust can only grow.

Of course, concerns may well exist among the banking community about going down this road, as it could lead to greater reputational damage if a data breach ever occurred. And perhaps those concerns are justified as 73% of consumers would reconsider using a company if it failed to keep their data safe, according to research by Deloitte. However, technological advancements, such as the use of biometrics in securing transactions, should help to nullify these fears – if consumers start placing greater trust with their bank and put them in control of securing their digital assets too, this will, ultimately, make the decision to change banking provider that much more difficult, an opportunity that is too great to ignore.

Clearly, as threats increase and become more complex, customers will become more anxious and will be looking for a safe haven and an extra layer of support.Perhaps the time has come for financial services institutions to look beyond the threat and instead see the challenge as a potential opportunity.An opportunity to help customers protect themselves – which automatically makes a bank’s own defences that much stronger. By placing their organisation at the centre of more areas of a person’s life, banks can, in turn, prevent customer churn and foster deeper, longer lasting relationships with consumers.