Most people do not want banks to share their personal information with third-party brokers, insurance agents, or firms that might sell it to telemarketers, but they do not mind if banks give information to affiliates if they could get specially tailored advice as a result.
So says a survey released this week at the American Bankers Association's annual convention in Palm Desert, Calif. The survey, which Electronic Data Systems Corp. of Plano, Tex., conducted in May, is believed to be the first of its kind to specifically ask consumers whether it is OK for banks to share information with either third parties or affiliates, and at least one privacy consultant said that "it was about time."
L. Richard Fischer, a partner at the Washington law firm Morrison & Foerster LLP and a privacy consultant, said the survey's results could help banks in their marketing.
"If there are consumers who believe that the sharing of information is going to help them, banks and their affiliates can give those people more customized service," he said.
EDS polled 610 customers of banks, thrifts, or credit unions, and nearly half (47%) of the customers said that an analysis of their personal information by their financial institution for future use is acceptable. Of this group, two-thirds said such "profiling" would be OK if it resulted in customized advice or service from the institution or one of its affiliates.
In contrast, 93% of the survey's respondents said their institutions do not have a right to share any information with third parties.
Consumers who believe sharing information with affiliates is OK "realize that it's not just sharing for sharing sake, but it's sharing to help them out," Mr. Fischer said.
Peter J. Reid, a portfolio strategist with EDS' security and private services group, said that banks should go beyond the usual "opt-out" option included in privacy notice mailings, as required under the Gramm-Leach-Bliley Act of 1999. He said financial institutions should let customers explicitly choose whether they want their information shared with third parties, affiliates, both, or neither.
"Banks would be much more effective this way, since their affiliates would market only to people who'd really want to hear from them," Mr. Reid told attendees at the ABA convention. Such a targeted marketing campaign would also cost a lot less than marketing to everybody who did not respond to a more generalized "opt-out" mailing, he said.
However, banks and their affiliates should position marketing materials as advice, rather than selling, Mr. Reid said.
Of the survey respondents who said they would not mind having their information given to affiliates, only 13% said the practice would be acceptable if it were designed to sell them targeted products or services. In contrast, 66% said the sharing would be acceptable if the information were used either to provide customers relevant financial advice or to offer them customized services based on their individual profiles.
Avivah Litan, a vice president and research director at Gartner Inc. in Stamford, Conn., said explicitly asking customers whether it is OK for affiliates and/or third parties to receive their information is useful for another reason. As the survey found, many people would not want banks to share their information with anyone.
"A lot of consumers don't want more personalized offerings, if it's at the expense of data privacy," Ms. Litan said.
The survey also asked consumers what they would do if a security breach at their financial institution compromised their personal information. Though 28% said they would wait to see how the bank handled the crisis before taking any action, 55% said they would discontinue banking activity immediately until they were assured the crisis was resolved, and 30% said they would close all accounts and eventually move to another bank.
EPS conducted the survey with the help of the Paris market research firm Ipsos Reid.
