Customers Willing to Swap Privacy for Security: Survey

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A global survey Cisco released Monday offers clues to the types of technology consumers want to use to interact with their banks. One finding was that 69% of U.S. consumers would provide more private information in exchange for more personalized service, higher security against identity theft, and greater simplicity in managing their finances. These enhanced services could harness "the internet of things" in which everyday objects transmit information to a network.

More specifically, 83% of consumers said they would be willing to provide details about their financial habits and have their banks be more active advisors in exchange for greater protection from identity theft. "There's an awareness that identity theft is a very ugly thing to have happen and that banks are naturally going to be targets," says Al Slamecka, marketing manager, Financial Services, for Cisco. Many U.S. consumers (53%) would be willing to offer up biometric identification like a fingerprint in return for better protection against ID theft.

About 80% of consumers would cough up personal details in return for increased savings, 78% would do so for more personalized service, and 60% would offer more personal information in return for greater simplicity in managing their finances. They strongly indicated, however, that they do not want their bank to share their information outside the bank — 57% said no to that.

What additional information would consumers share in this scenario that their banks don't already have? Cisco didn't specifically ask that.

But the interesting psychological note for banks is that consumers don't natively know how much information their bank has about them. "Only 46% of consumers believe their banks know enough about them to be able to offer personalized services," he says. On the other side of the fence, 58% of bankers Cisco surveyed thought they had enough information about customers to provide personalized service.

Asked about the most important attributes of interacting with their financial institution or financial advisor, U.S. respondents selected efficiency (61%); competence (60%); and availability (60%).

Efficiency, in Cisco's worldview, refers to whether transactions take place in an appropriately timely manner (for instance, ATM transactions instantly, mortgages over a far longer time period but within normal parameters). "Competence is when they do access these services, being able to interact with the right level of skill or information based on their needs," Slamecka says. Availability is the ability to access financial services whenever the consumer wants.

Surprisingly, given how many bank and nonbank providers are rolling out personal financial management software, only 54% of consumers expressed a desire for automated systems to provide financial advice or recommendations.

About 73% wanted advice to increase their savings, 67% requested more financial education, and 47% wanted an assessment of their financial status as compared to other clients. About 59% indicated that they would be comfortable with location-sensitive recommendations delivered to a mobile device.

It could be that banks have yet to find the right model for delivering financial advice. Slamecka suggests there could be an appetite for presenting suggestions in real time, harnessing the consumer's geolocation information and the "internet of things," in which everyday physical objects are connected to the Internet and can identify themselves to other devices.

"There are going to be more and more devices connected to the network that offer some form of intelligence," Slamecka points out. "You could envision a world where as the customer is going through the aisles of a grocery store, information could be coming from the actual items they place in their cart, and the consumer could be offered promotions around sale items." More relevant to bankers, the consumer could also get an alert informing him that if he wants to stay on track with his budget, he'd better put a few items back on the shelf.

"If education can be put into the context of your daily life, it becomes more readily acceptable," Slamecka says. In a related example, he uses a weight-loss app that teaches about the calorie content of the foods he eats. "What you find is, you eat a lot of the same things over and over. And it's probably true that you have a lot of financial activities that are fairly regular as well."

Surveyed consumers also expressed willingness to handle more complicated transactions over virtual channels — 48% said they'd be comfortable closing a loan if the entire process was done over virtual communications — telephone, email, video chat or instant message. About 63% of U.S. consumers are comfortable communicating with their financial provider using technology (such as texting, email or video) instead of seeing them in person (only 34% would want to communicate with a financial advisor this way. But they don't necessarily want video chat on their smartphone. Only 21% of U.S. consumers would favor a smartphone for video conversations with bankers, with most (79%) preferring laptop or desktop computer.

Branches are still important to U.S. consumers, based on this research. Only 46% of U.S. consumers would open an account with a bank that is completely virtual if it offered the best and more secure services, compared to 60% of consumers globally who would open accounts with virtual banks.

The survey was conducted in early 2013 and includes responses from 1,514 consumers and 405 bank professionals across 10 countries.

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