Recent high profile data breaches have prompted a renewed focus on fraud and data security for Australians. Big questions about what types of customer data is stored, where and for how long are likely to be recurring themes over the next few years, not only in Australia but globally. We can also expect that consumers’ expectations of organisations will evolve, with financial services being held to a particularly high standard.
The Impact of Data Breaches on Trust
It is important to consider the wider ranging impacts of data breaches and other security incidents – in particular how these can impact customer trust. Banks enjoy a highly trusted position – RFI data across all markets globally banks are the most trusted organisations when it comes to the protection of customer data. However, there is also a high expectation around security for financial service providers.
Following the Optus data breach in Australia in late 2022 RFI data showed, somewhat unsurprisingly, a significant decline in trust for Australian telcos, falling from 32% in June 2022 to 21% in December 2022. What is more surprising is that this decline in trust was not isolated to this one industry, but was evident across a wide range of institutions, including financial service institutions. This suggests that when it comes to data security, the impact of an incident is not limited to that sector but affects consumer sentiment more broadly. This means that regardless of an institution’s track record, following a high-profile data breach it is important to reassure customers and remind them of security protocols in place.
What do financial service providers need to be focused on?
When it comes to banking, there is a high expectation around security but also a sense that banks should be doing more to support customers. According to RFI data, 71% of Australians agree that banks ‘could do more to educate customers on how to stay safe’. Customers are after more information around what they can do to prevent becoming the victim of fraud, and also want to know that their bank will be there for them if they are. When asked what banks could do to reassure customers, ranked first across all segments was the ‘guarantee that you’ll recover your money’.
However, it is also critical that financial service providers do not compromise on user experience, especially when it comes to digital banking. Online or mobile banking logins being compromised is a key concern for consumers, and RFI data also suggests that there is interest in adding additional layers of security to digital banking, for example adding multi-factor authentication. Financial institutions must balance this desire for greater security alongside the need to create a good user experience for customers. RFi data indicates that 3 in 4 Australians use digital banking on a weekly basis, with mobile banking in particular being used frequently to perform quick, day-to-day banking tasks like checking balances and transactions. Adding friction into the login process is likely to not only impact user experience but lead to a decline in usage of digital.
We can expect that fraud and data security will remain a key concern for customers throughout 2023 and beyond. Customers are seeking reassurance and this means banks need to highlight to customers what security measures are in place to protect both their money and their data. Banks should also have in place a plan to communicate to customers on this consistently and continuously. Banks also have an opportunity to further support customers by educating customers on how to keep themselves safe.
About the Author
Kate Wilson is Global Head – Consumer Credit, Deposits & Payments for global data-driven strategic insights provider, RFI Global.
She joined the business in 2012, using her quantitative and qualitative research skills to support RFI Global’s research programs across a range of topics and regions. Kate currently heads up a pillar of the Global Research Team, working closely with clients to answer key business questions across a wide range of topics and areas. She presents to stakeholders on a daily basis on topics including consumer credit and payments, digital banking, mortgages, deposits and SME banking.
From 2015 to 2017, Kate worked in RFI’s EMEA headquarters in London, as Global Insights Manager, a role which involved combining insights across markets, identifying global trends and supporting the business strategies for a number of RFL Global’s key global clients.
Kate is a regular speaker at conferences and events, and features in the news on a frequent basis. She has a Bachelor of International and Global Studies from the University of Sydney.