NEW YORK, Oct. 16, 2014 (GLOBE NEWSWIRE) -- In the wake of the recent data breaches at both prominent U.S. retailers and large financial services providers, consumers surveyed report still being relatively comfortable sharing personal information in exchange for perceived value, and more importantly, trust financial services providers in particular to safeguard their personal information. That's according to the latest AlixPartners Financial Services Franchise Health Study, which reports that the consumers surveyed still have more confidence in their bank's and payment network's ability to safeguard the security of personal information than they have in either digital brands or retailers. Eighty one percent of survey respondents rated their primary bank, 76% rated Visa and 74% rated MasterCard as having the ability of safeguarding "extremely or very well" their personal information versus only 53% who felt the same way about Apple, 47% about Google and 29% about Facebook. Retailers as a category received only a 36% rating.
"News stories about security breaches and warnings for consumers are becoming a daily event," said Bob Hedges, managing director in AlixPartners Financial Services Practice, "but consumers still seem interest in exchanging information with retailers for real value remains steady, and more importantly, consumers continue to look first to banks to protect their personal information."
Among smartphone/tablet owners with bank accounts surveyed, 88% of respondents said they were at least "somewhat" up to "extremely" comfortable sharing personal information such as recent purchases, shopping preferences, or product and wish lists in exchange for personalized offers, discounts, or coupons on products or services that they are interested in purchasing.
Teresa Epperson, managing director in AlixPartners Financial Services Practice said, "In the context of consumers sharing personal information and purchase data, not all players are equal on the perception of data-security dimension. Banks are the traditional leader, and still lead, but the rise of Amazon and PayPal is noteworthy."
According to the survey, 57% of the respondents who were at least "somewhat" comfortable were comfortable sharing personal information with a bank, 52% with Amazon, 50% with PayPal and 42% with a credit card company, but only 26% said they were comfortable doing so with a large retailer. Digital brands like Apple, Google and Facebook received ratings by the survey respondents of 25%, 22% and 16%, respectively.
"Retailers and digital brands will need to make up ground with consumers. New offerings like Apple Pay that partner with traditional banks may be part of the answer towards building that trust," said Epperson.
Among respondents' at least "somewhat" comfortable sharing data, consumers' willingness to share is influenced by the nature of the value received by the consumer. In exchange for lower fees, or special deals or offers on specific products or services they regularly use or purchase, more than 50% of survey respondents who are smartphone/tablet owners reported being at least "somewhat" comfortable sharing personal information. The willingness to exchange personal information drops significantly, however, to 21%, in exchange for offers to participate in contests to potentially win prizes, and to only 20% for additional products and services recommendations.
"Data-sharing works when it is consumer-driven, transparent and in exchange for direct compensation. We are entering a new era where consumers will expect data sharing to be increasingly transparent," said Hedges.
According to the study, more than 50% of smartphone/tablet owners who are at least somewhat concerned with using the mobile device for shopping/commerce are specifically concerned with the level of security offered by their mobile device if it is lost, stolen, or hacked.
"Apple Pay and Android's PayPal app appear to be working to mitigate these concerns by offering biometric payments and educating consumers on the data-clearing capabilities of services such as Apple's Find My Phone service" noted Epperson.
Among smartphone/tablet owners concerned about the security of mobile commerce, PayPal and banks are the companies most capable of addressing their concerns. The recent Apple Pay announcement and their partnerships with large retail banks along with innovative players like PayPal and Square could give consumers the confidence they need to regularly transact on mobile devices. Increased layers of security, like voice recognition and fingerprint scanning, could also play an important role in the future of mobile commerce.
"Even though the iOS 8 update was released just a few weeks ago, many companies are already embracing and updating their apps to accept Apple's Touch ID in lieu of passwords and PINs, and some add-ons even let users enter credit card details on mobile websites through the biometric technology," added Epperson. "We are also beginning to see similarly creative responses from retailers and banks."
In reaction to all of the marketplace changes occurring, Hedges commented, "We are beginning to seeing a dramatic acceleration of banks' efforts to prepare for the digital commerce future. Strategic scenarios that may have previously been only considered input to an industry 'war game' exercise are now what industry executives are debating today and preparing to execute."
About the Study
The AlixPartners Mobile Financial Services Tracking Study comes from a consumer survey conducted by AlixPartners at the end of the second quarter of 2014, and is the latest edition in AlixPartners' semi-annual Franchise Health Survey. The overall survey has been conducted in the second and fourth quarters annually since 2008, and the most recent one includes an online panel of nationally representative samples of 5,006 U.S. banked consumers of at least 18 years of age.
About AlixPartners Payments Scenario Model
Our Payments Scenario Model offering is a scenario development and war gaming tool to simulate the dynamically changing payments ecosystem. Working with the Payments Scenario Model, senior executives make key strategic payments choices with visibility into the results of each decision, helping them refine their overall strategy in the increasingly high-stakes and evolving market.
AlixPartners is a leading global business-advisory firm of results-oriented professionals who specialize in creating value and restoring performance at every stage of the business lifecycle. We thrive on our ability to make a difference in high-impact situations and deliver sustainable, bottom-line results. The firm's expertise covers a wide range of businesses and industries whether they are healthy, challenged or distressed. Since 1981, we have taken a unique, small-team, action-oriented approach to helping corporate boards and management, law firms, investment banks and investors respond to critical business issues. For more information, visit www.alixpartners.com.
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