The cost needn’t be significant, and perhaps its even possible for everyone to make money from this while increasing consumer security. PC manufacturers normally bundle trial subscriptions of anti-virus software with new systems, and I’d be surprised if they are paying anything to deliver a customer that is likely to renew once the initial subscription wears off. Why can’t financial institutions use the same method to introduce consumers to a new brand of anti-virus solution (McAfee, Symantec, etc), to a new brand of anti-virus to a fraud alerts product? (Affinion, Debix, Lifelock, etc)? Banks are seeing online adoption rates level off from previous years, and the main objections now center on security.

One word of caution: banks and security vendors should focus on more than just Internet security threats when offering products to consumers, remembering to focus also on the inherent benefits of turning paper off. You don’t want to send a mixed message.

Unlike logging into your bank’s website, the potential to commit fraud or obtain information by which you can commit fraud is limited. You cannot order new checks or cards, you cannot open new accounts or lines of credit at your bank, you cannot change contact or personal information at your bank (or even obtain it). You can generally only see account balances and recent transactions.

The article doesn’t mention anything about the research that might have informed this recommendation, but it doesn’t answer: “why the call for regulatory action?”

This announcement won’t create overnight change, but advancements in standardization of disk-resident mobile appls is important to the long term progress of mobile banking and payments. Mobile banking and payments will be all about security and the cost-effectiveness of payment companies being able to maintain software on multiple handset and network environments. Standardized, low cost downloadable app schemes are an important development, and so far we’ve had two announced this week.

24/06/2008 14:24:00
CITI M-BANKING TECHNOLOGY COMPATIBLE WITH ANDROID

Mobile Money Ventures (MMV) – the joint venture set up by Citi and South Korea’s SK Telecom – is developing a banking application that will be compatible with Google’s new mobile phone operating system, Android.

Today’s browser-based mobile opportunity is the ultimate low hanging fruit, which is why our 2007 mobile report advocated focusing so heavily on it. Even thought just 12% of online consumers have a smart phone enabled, over half of today’s mobile bankers use this platform as compared over a third of consumers that use SMS Text. Both of these platforms will increasingly be adopted, and I believe that future growth will occur faster in SMS/text, particularly as alerts come into increased use. Yet just as Google Checkout is something you can’t completely take your eyes off of, Android is something to watch. We’ll know much more as the year unfolds, yet industry leaders cannot afford to wait.

SAN FRANCISCO, June 23, 2008 –Javelin Strategy & Research announced today results from a new study covering data breach victims, which highlights the acute awareness among consumers about data security and the significant implications security breaches represent to businesses once consumer trust is compromised.

“We are well known for our reporting on identity fraud with 5 years of longitudinal data and extensive coverage of key merchant breaches in 2007,” said James Van Dyke, President of Javelin. “This current analysis focuses on consumers’ expectations regarding a breached institution, the impact on their financial behavior and their perceptions about identity fraud. With that basis, we present how data breached companies should respond to data leakage incidents and discuss solutions that can be offered.”

Fraud preventative solutions are designed to avert new accounts fraud before it occurs. The strategic advantage of fraud prevention therefore lies in the ability avoid losses to institutions and consumers.

Key Findings

• Javelin’s survey of hundreds of data breach victims, identifies that 55% of consumers experiencing a security breach expressed diminished confidence in the breached organization’s ability to protect and mange their personal data. When consumer confidence is shaken, it weakens relationships with the affected institution, according to Javelin.

• Data breach victims (56%) favor a solution that prevents fraud and although there are several solutions available, Javelin identifies the benefits of contacting the consumer, creating an audit trail that law enforcement can utilize, preserving the consumer’s privacy and proving it works.

• Providing a fraud protection solution makes a tremendous difference in customer approval of the breached organization’s management and handling of the incident. Javelin data shows that 55% of breach victims that were offered a fraud protection solution were more satisfied with the institution’s handling of the incident, compared to those consumers who were not offered anything.

Key Recommendations

Javelin recommends the following measures that address consumer security concerns and expectations, to institutions in the event of a data breach:

• Given the wide variety of fraud protection solutions and varying features out in the market, engage in comprehensive research of the different services available to understand how they play a role in prevention, detection and resolution.

• Select a solution that is convenient and easy for the breach victim, in terms of enrollment and use, with an understanding of the impact on preventing new accounts fraud.

• Understand that offering a breach solution is a best practice from a customer service standpoint; in other words, do not create a situation in which your customers and/or employees have to request fraud protection assistance. Take a proactive approach by offering the assistance up front.

Download the Research

For a free copy of the research visit www.debix.com/javelin.

Free Vendor-Sponsored Educational Research Webinar

On July 15th at 10:00am PDT, Javelin plans to present its findings during an educational webinar that will be open to the public, titled: When a Data Breach Occurs, What Do Consumers Expect? Sponsor and co-presenter, Debix, will present its Identity Protection Network, which focuses on building solutions that prevent identity theft and publishing metrics to prove their solution works.

Registration for the webinar can be found at: https://www1.gotomeeting.com/register/254276431.

Methodology

This is sponsored research to a nationally representative consumer audience meeting Javelin’s standards for independence and objectivity. For this study, data was collected and analyzed via an online consumer survey of 400 data breach victims. In addition, Javelin conducted in-depth interviews with breached institutions that had recently implemented a fraud protection solution for affected customers.

About Javelin Strategy & Research

Javelin is the leading independent provider of nationally representative, quantitative research focused exclusively on financial services topics. Based on the most rigorous statistical methodologies, Javelin conducts in-depth primary research studies to pinpoint dynamic risks and opportunities. Javelin helps its clients achieve their business initiatives through three service offerings, including syndicated research subscriptions, custom research projects and strategic consulting. The company’s client list includes some of the largest banks, credit unions and card issuers, as well as significant technology enterprises in the financial services industry.

For more information about Javelin reports, please visit www.javelinstrategy.com/research or call (925) 225-9100 extension 35.

Javelin Contact
Kathleen McCabe
Marketing Director
Javelin Strategy & Research
925.225.9100 ext.15

Javelin predicts the mobile channel “will grow rapidly over the next five years.” Schwanhausser adds, “The number of banks getting into this channel is growing rapidly.”

Adding Mobile to the Mix

BB&T ($132 billion in assets) is one of those banks. Paal Kaperdal, SVP and online channel manager for the bank, says the Winston-Salem, N.C.-based institution looked first at customer needs when developing its m-banking strategy. “Mobile is just one method, one touch point where we can extend what we already do with a client,” he says. “We don’t see [mobile] existing separately from all the other interactions. ... There are significant synergies in making it work seamlessly across the various touch points.” Currently, BB&T offers mobile banking exclusively to its Internet customers.

However, Eskander Matta, SVP with San Francisco-based Wells Fargo’s ($575 billion in assets) Internet services group, says his institution already has disconnected the mobile channel from Internet banking. “You’re able to enroll for mobile whether you’re an online banking customer or not,” he explains.

Matta notes that the bank first tested mobile among its own team members. Wells Fargo rolled out a mobile browser for its consumers in July 2007, and it introduced text banking in October 2007, according to Matta, who reports that the mobile channel has been extremely well received.

“Adoption is exceeding our expectations, and the usage statistics are very promising,” Matta relates, adding that two-thirds of those enrolled in Wells Fargo’s mobile banking program have been active within the past three months. For customers, “Data is consistent across all channels,” he says. “There’s no latency.” Read Full Article