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ID Theft: Turning It into a Business Opportunity

By: Neal O'Farrell

Banks don’t need to be told they’re losing business to fears over online security and identity theft. An even greater challenge is persuading more customers to try the significant benefits online banking can offer. 

But despite the high cost inflicted on all ecommerce by cybercrime and security fears there is always an upside, and banks may be missing a valuable business opportunity by not taking a more comprehensive and aggressive approach to building better customer awareness about identity theft.

Numerous studies have shown that contrary to media coverage the majority of identity thefts are not Internet-based cybercrimes, but are much more likely to be offline crimes committed by persons known to the victim. A 2005 study by Javelin Research and Strategy found that roughly half of all identity thefts were committed by people who were not strangers to the victim and that the most common source of the crime was a lost or stolen wallet, checkbook or credit card, and not a high-tech data heist.

Read the fdic's supervisory policy on identity theft

According to James Van Dyke, president of Javelin, “No matter how you slice the data, it’s really hard to arrive at a scenario where the Internet could be the source of the majority of identity fraud.” This suggests that the majority of ID thefts can be better prevented by individual awareness and vigilance than by the latest firewall, spyware catcher or authentication token.

Used properly, a comprehensive customer security awareness program can not only offer valuable security and legal benefits, it can also help improve customer goodwill, enhance brand reputation and ultimately create some unique marketing opportunities. And unlike all other security options available, security awareness is the only option that doesn’t have to work in order to be successful.

While many financial institutions are investing in phishing prevention technologies, account monitoring, and better user identification and authentication, their value as a marketing opportunity pales in comparison to security awareness:

If the majority of ID thefts begin with the theft of personal information by someone close to the victim, personal awareness becomes a much more powerful security tool that any currently available technology.

Banks can take several steps to building better awareness:

1. Embrace the positive aspects of identity theft and the opportunity it presents to build stronger relationships with customers. A strong stance and constant message on identity theft prevention helps build goodwill, confidence and long-term relationships. It reduces the chance that customers will switch to another bank out of security concerns and increases the likelihood that they will recommend the bank to others.

2. Teach bank employees about identity theft so they become ambassadors for the cause. Apart from the security and legal benefits, the more often employees think and talk about ID theft outside work, the quicker word will spread about the bank. And employees are consumers, too, with their own personal worries about identity theft.

3. Be first to talk about ID theft when it hits the headlines. View security incidents and media headlines as just more opportunities to highlight your commitment to security and set yourself apart from your competitors.

4. Create a comprehensive identity theft resource on your website that offers customers and their friends an expert destination they can turn to for all their security answers. More  investment in identity theft education will result in more more website traffic. And more web traffic means more business and contact opportunities.

5. Create an opt-in email security newsletter or alert service. Few customers welcome regular email marketing solicitations from their bank. But most are likely to appreciate regular, even daily email communications that advise them of new security threats and risks, offer helpful tips and information and keep them up-to-speed on the latest threats. The bottom line is the same: every contact made is a marketing opportunity, even if the content is not a direct product pitch.

Neal O’Farrell is the founder of My Security Plan LLC, a security education firm dedicated to raising consumer awareness about cybercrime and identity theft. He can be contacted at neal(at)mysecurityplan.com.

Copyright © April 2007 by BankNews


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