Privacy Concerns Threaten Emerging Interest In Banking On Social Sites

Facebook’s recent bad press regarding privacy changes on their site and reported leaks of customer information contribute to a growing concern among users. The uproar also underscores what Forrester and our clients have known for years about security and privacy online: they are the bedrock on which solid online (and mobile) customer relationships are built. Nowhere is this more important than with financial services customers.

It comes as no surprise, then, that 71% of online consumers surveyed by Forrester say they have little to no interest in accessing their bank accounts through social networking sites like Facebook. What is the number one reason why? Security concerns. Number two? Privacy concerns. Seems like FarmVille and financial services just don’t mix. Perhaps more surprising, though, is the 17% of respondents who say they are interested in accessing their bank accounts via social nets.

The real question is how interested are these consumers’ financial institutions in offering account access through Facebook and other social networking sites? As financial firms today look for every opportunity, in every channel, to deepen their relationship with their customers, it’s hard to ignore a community with a 30-day active population of more than 400 million users, 50% of whom visit on any given day.

As financial institutions begin to look more carefully at how to tap into consumers' enormous interest in social networking sites to better service, cross-sell, and up-sell their customers, it’s critical to understand consumers’ concerns and how to mitigate them, while still taking advantage of the rich interactions these sites engender.

 My new research report, Banking On Social Sites Is A Work In Progress, examines why customers aren’t feeling the love when it comes to banking through social nets and what steps online channel managers can take now to begin to change that.

Online banking and mobile banking had similar adoption pains caused by security and privacy concerns. Banks overcame customer hesitation through clear communication, security guarantees, strong authentication, and more. For Facebook users today, they’d certainly welcome some clear communication about security and privacy.