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By Dan Ilett, 20 September 2005 15:15

NEWS

Banks must improve security practices or risk losing their customers, IT services company EDS has said.

The remarks follow a survey conducted for the firm, which found almost one-third (30 per cent) of consumers would close all accounts and move to another bank if their personal data was compromised.

A further 10 per cent said they would close some accounts and use another bank if this happened, and 55 per cent said they would stop banking until the crisis was resolved.

In a press statement, Jean-Louis Bravard, EDS financial services global leader, said: "The results of this survey accurately reflect a common theme we are seeing in the industry.

"The act of protecting consumers' personal information is not only imperative to meet compliance standards but is essential in a financial institution's ability to attract and retain a solid customer base. Financial providers must rise to security challenges or they risk losing their customers."

The survey of 1,424 people in north America, conducted by Ipsos Reid, found consumers recognised several risks associated with online banking, such as identity theft (81 per cent), fraud (59 per cent) and insufficient encryption of sensitive data (48 per cent).

When asked what banks should do to improve security, 83 per cent said they should obtain permission before releasing customer information to third-party companies.

Eighty per cent of consumers cited convenience as the primary reason for online banking.