Customers who trust their banks to maintain privacy reward those institutions with their loyalty, according to Ponemon Institute’s 2008 Privacy Trust Study for Retail Banking. “More than 69 percent of individuals participating in the [study] strongly agree or agree that their primary banking institution is committed to protecting their personal information,” Director Dr. Larry Ponemon’s executive summary states. “Overall, privacy trust scores for all top 25 banks decreased slightly from 2007,” he continues: “However, those banks that experienced a significant data breach saw a significant decline in their privacy trust scores.”
The 2008 study put US Bank in first place, followed by National City in second and SunTrust in third. Tied for fourth place were PNC and Citizens. Rounding out the top five positions was Wachovia. Of note, only US Bank and National City have been ranked in the top five most trusted banks every year since Ponemon began the ranking in 2004.
The Institute’s survey-driven study showed a strong relationship between customers and loyalty. “Specifically, in 2008 the top five banks for privacy trust have an average longevity of 7.68 years (13 percent extrapolated churn rate) for their customers,” explains Ponemon in the study summary, “as opposed to 4.6 years (22 percent extrapolated churn rate) longevity for customers of the bottom five banks.”
And it just takes a few mistakes for banks to lose customer confidence. Nearly seven out 10 survey participants said that even among the top-trusted institutions “it would take only one or two data breaches to destroy that relationship,” according to Ponemon. The 2007 and 2008 studies showed that 82 percent of those surveyed would switch banks after one or two such mishaps.
How can banks build faith? Focus on customer services, disclosure, ID and authentication, and a commitment to “stand behind the customer in the event of data theft or other related crimes resulting from lost or stolen data,” the summary states. Another trust-builder is “respectful” advertising, promotion, and outreach that offers easy opt-out.