Published on the 09/04/2019 | Written by Heather Wright

Royal Commission into bank misconduct has impacted consumer trust…

Australia might be further advanced in Open Banking, but when it comes to trusting banks to protect data, Kiwis are far more confident – but Australasians are united in their distrust of biometrics.

That’s according to a new survey from Unisys, which found that Australian’s have the lowest level of trust in banking institutions when it comes to handling personal data securely, with trust rapidly falling with age. In stark contrast, New Zealand bank consumers – mostly of the very same banking services as Australians – had the second highest level of trust out of the five countries surveyed.

Just 16 percent of Australian respondents said banks were the organisation they’d trust most with their data, behind government at 19 percent. In New Zealand, however, 41 percent of respondents were happy to trust their bank, with the government taking number two slot but well behind at just 17 percent (the lowest level of trust in government seen across the survey). Telcos scored a measly one percent, in both countries, matched by online services such as eBay, Amazon and Alibaba at one percent in NZ. Online services garnered four percent in Australia.

“They can’t treat Open Banking as a compliance issue – they have to see it as being key to customer trust and experience.”

It is the first time the annual Unisys APAC Banking Insights survey has delved into the issue of trust in banking, asking respondents which type of organisations they trust the most with their personal data.

The trust question follows last year’s Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The Commission put a glaring spotlight on the banking sector and the misconduct shook the foundations of some of Australia’s oldest institutions, as well as Australian’s trust in them.

Governments and financial regulation bodies across the region are setting formal standards making banks accountable for taking appropriate steps to protect customer data.

The 2019 Unisys APAC Banking Insights survey suggests that while banks are embracing the development of new products and services, they have yet to win the hearts of customers, who want to know that banking organisations can be trusted to safeguard personal information.

“The [Commission] has put the spotlight on banking practices, and customers rank data security as a higher priority than transparency or efficiency,” Ian Selbie, Unisys Asia Pacific industry director for financial services, says of the Australian results.

“Australian banks rate themselves as more advanced than the rest of the region in Open Banking – where banks can digitally share data and processes with third parties to provide new services to customers. However this research shows that banks don’t have the trust of the public,” Selbie says.

“Australian banks need to act quickly to restore consumer trust by visibly enhancing their security, compliance and ethical standards. They can’t treat Open Banking as a compliance issue – they have to see it as being key to customer trust and experience. Some good news for Australian banks is that trust is highest among young customers, providing a foundation on which to rebuild their customers’ trust over time,” he says.

Open banking creates a significant shift in several elements of the security and risk landscape and offers potential benefits including improved customer experience and new revenue streams, however, Selbie says New Zealand’s positive results don’t mean banks can relax.

“This research shows that New Zealand banks currently enjoy a high level of customer trust, but as security is such a priority for customers, banks will need to keep that trust by visibly enhancing their security, compliance and ethical standards,” he says.

Forty-five percent of Kiwis, and 60 percent percent of Australians, cited security and safety of customer data as the thing that matters most when it comes to banking. Fast efficient services mattered most for 54 percent of Kiwis and 49 percent of Australians.

Australians were also the least happy about using biometrics to verify identity when authorising financial transactions, Unisys says. Despite that, 59 percent are happy to use facial or fingerprint recognition at ATMs (vs 67 percent of Kiwis) and 57 percent of both Aussies and Kiwis are happy to use voice, face or fingerprint to access mobile banking apps.

Voice recognition for call centre access was given the thumbs up by 45 percent of Australians and 60 percent of Kiwis. But behavioural biometrics is still just a little too uncanny for the majority, with just 27 percent of Australians and 32 percent of Kiwis comfortable with banks tracking the way a person scrolls through websites, types on a phone or presses buttons, to verify ID.

And the reason for the lack of support for biometrics? Forty percent of Kiwis said they’re ‘just not comfortable’ with the technology, while 35 percent cited data security concerns. For Australia, it was 57 percent ‘just not comfortable’ and 46 percent concerned about data security – with 46 percent also saying they didn’t want the bank to have access to their identity data.

“Rebuilding customer trust is key to implementing this type of advanced security measure,” Selbie says.

“Banks have made significant headway as they evolve their products and services to keep up with customer expectations of digitalised services,” he says.

“However, banks must be careful they don’t mistake the use of digital technologies for digital transformation.”

He notes that digital transformation is the idea of using technology not just to replicate an existing service in a digital form, but to use technology to transform that service into something significantly better.