Do You Trust Banks With Your Data?

May 18th, 2016 by

A majority of Americans—51%, according to the Consumer Trust Survey—would not trust anyone with their personal information.

moneymanWho can blame them? Today more than ever there is reason to be concerned that our personal data (namely, financial information) is not secure. With the explosion of the Internet and the increasingly digital nature of our banking services, there’s no getting around the potential to be exposed to fraud.

While payments companies have beefed up their anti-fraud measures and now provide reasonable security for services like online credit card purchases, the banks themselves have been slower to adapt (as we will see below).

Rampant Level of Distrust

The survey about which institutions consumers do (or do not) trust revealed the stark reality that banks have an absolutely terrible reputation in the post-financial crisis world. The respondents were by and large especially distrustful of Wall St banks—and for good reason!

For instance, it is only recently that federal laws mandated that investment brokers giving fiduciary advice should be held to the standard of only considering what’s in their client’s best financial interest. (Shouldn’t this have always been the case? Well, until this “fiduciary rule,” a requirement by advisors to act in such good faith was not part of the law.) In many cases, it becomes insultingly clear that bank’s employee (basically a salesperson) has the firm’s interest or their own interest (in the form of commission) in mind when advising their client. This, as they say, is a conflict of interest. It’s therefore no surprise that 75% of respondents from the aforementioned survey indicated that their bank was not the person or institution that they would trust most with their data.

In fact, 18% of those surveyed went as far as agreeing that they would prefer to break a bone rather than have their sensitive information stolen or compromised! At least a bone heals; if your hard-earned financial future is devastated, there’s often no such recovery to normal.

Lagging Behind

rfidSomewhat surprisingly, the perceived safety and security of U.S. banking services is so low that even millennials are not interested in dealing with banks. They are, however, drawn to the convenience and potential benefits of online banking. As a demographic, millennials conduct 62% of their banking online.

Unfortunately, the U.S. lags far behind many of its international contemporaries in terms of developing, securing, and implementing more e-banking solutions for their customers. In other developed countries like Australia, Canada, and the U.K., consumers enjoy much better access to online banking services.

Particularly amid concerns about the U.S. government and the NSA tracking the data of citizens for potential misuse (such as the sale to advertisers, marketers, or identity thieves), it’s surprising that legitimate conveniences like access to banking through the Internet are not as sophisticated in the U.S. as they are elsewhere. Moreover, most Americans are simply not ready to trust their bank with important data.

 

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.