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Internet users willing to pay for just a feeling of security
San Jose Mercury News, Business Monday, by Carol Holding, September
16, 1996
Security. The word deflates any enthusiasm about banks and the
Internet. And even though I have not read or heard of any actual
breaches in security which have left bank customers holding the
bag, everybody, banks and customers, are scared to death.
Periodically, banks have faced crises in security and subsequently
have had to pick up the pieces of their shattered image. After
the bank collapse of the 1930's, banks turned to FDIC insurance
to ensure that customers would never again lose their life savings.
They then managed perceptions of risk by stamping that logo on
just about everything. After all, the assurance of safety is a
bank's key point of difference and the reason consumers are willing
to pay high fees and accept low interest rates. In fact, the FDIC
logo rebuilt the security promise of banks to such an extent that
by the 1980's, people assumed (wrongly) that all bank products,
including their mutual funds, were thus insured.
Symbols associated with security, like the FDIC logo, have always
played a key role in engendering public confidence. From royal
stamps on fourteenth century bills of exchange to stage coaches
and barred windows to imposing bank building facades and high-tech
theft-proof safes, symbols of security have helped bank customers
throughout time feel they are protected.
Yet today, as banks attempt to promote Internet banking products,
security symbolism is nowhere to be seen. Moreover, on-line messages
such as, "You are now leaving an unprotected area," appear to
foist the burden onto customers - as though he or she has willfully
strayed into the danger zone.
Even the people you turn to for advice, the techno-nerds, the
"decision influencers," will probably tell you to stay away. According
to Bank of America Interactive's research maven Kay Parekh: "We've
found that the more technically savvy the customer, the greater
their sense of fear about Internet banking."
This unwillingness of the banks to accept Internet banking risk
may be due to the fact that banks themselves consider electronic
transactions unsafe. According to a 1995 Ernst & Young survey
of banks, "Ninety percent of banking respondents indicated that
information security risks have increased." And nowhere more so
than with an Internet connection, where your bank transaction
relies on software, Internet service providers, the phone company
- all factors over which the bank has no control, any of which
could leave big holes through which cyber-thieves could enter.
But banks must move customers on-line: the promise of universal
cash access has been made by technology. Customers are primed
and banks can't afford the long term risks of continuing to conduct
financial transactions in expensive branch offices.
So the only thing holding back electronic banking is the universal
perception of unacceptable risk. Consumers are just waiting for
some authority to ensure that their money is safe. Many companies
are vying for this position, but banks are the obvious choice.
As Anthony B. Perkins, Publisher and Editor-in-Chief of The Red
Herring, writes in last month's Harvard Business Review, "Ultimately
the banks and credit card companies will solve those issues for
us, not fledgling companies such as DigiCash and CyberCash. After
all, we have paid banks and credit card companies handsomely in
the past to protect us against fraud, and we don't see why this
will change in the future."
What is called for is radically altering current perceptions by
managing security in the same way banks always have. Think of
going to a branch to visit your safe-deposit box. The experience
is loaded with symbolism. Even the name is "safe-." The iron clad
sanctuary, the armed guard, the impossibly thick steel door covered
with rivets and deadlocks, the matching key the manager withdraws
as you produce your own - who knows if any of this really protects
your valuables, your feelings of safety and security are completely
validated.
Whoever can mimic this experience on the Internet will surely
stand to benefit. And though banks are the obvious choice, there's
no telling how long they can stand idle before someone else (credit
card companies or brokerages) fills their shoes.
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