In the financial sector you didn’t use to hear about security breaches relating to banks.
There were apocryphal stories, of course – like the one about the global bank whose programmer stole the rounding differences from all interest calculations for customers. And when the bank found him and fired him, he’d left a bit of legacy software in the system so that if his employee number didn’t appear in the monthly payroll run, the programme started to delete files from the mainframe.
But you never knew if that was all just rumour and hearsay.
Today, stories about breaches of bank and identity security are on the newswires almost daily. The damage that they can do is even more significant when it adds to the trust that many customers have lost in financial institutions that they deal with.
One UK savings institution has claimed that the number of new clients migrating to it from large banks is up by 26% week-on-week. 85% of those have been on-line migrations.
In the days when a customer would have to visit a bank branch to move their account elsewhere there was a chance of recovering the situation and not losing the customer.
Internet access by customers to financial services now means that you can lose a customer just as fast as you can win one and have no ability to get them back until after they have left.
Surveys by banks show that their retail customers are remarkably loyal to the institution that they are with, and that only around 8% of customers changed banks over a 5-year span. But when they’re gone, they’re gone – and they become just as loyal to the new organisation that they’ve entrusted their money to.
The cost of security breaches that cause loss of trust and customers should be measured not just in lost revenue but also in the cost of winning those customers back.
By Chris Pickles Head of Industry Initiatives, BT Global Banking & Financial Markets