Is it safe? Is it safe?
Online banking needs a shot of novocaine
By Tom SatoRecently my company, bargain America Corp., [an Internet marketing service accessing Japanese consumers for American Internet companies] conducted a survey asking whether Japanese felt secure making financial transactions on the Internet. When asked, "Do you think the Internet is a suitable media channel for financial information?" a whopping 96% responded yes. When queried, "Do you think the Internet is ready for financial transactions?" a majority, 56%, also said yes. But in contrast to their apparent support of banking on the Internet, respondents made additional comments expressing safety concerns about the medium. Why the contradiction? Two large city banks have started online banking service, and there are already a half-dozen online trading services run by Japanese security companies. But Internet users in Japan are wary of using these services because of a belief that the Internet is inherently insecure. The financial sector must prove to its customers that their money is safe before they can persuade customers to make transactions on the Internet. Now that Sumitomo and Sanwa banks have started offering full-service online banking, the media is paying close attention to this fledgling trend. Sumitomo's Web Direct has a promising setup, whereby you can check all of your transactions and make fund transfers 24 hours a day at a cost of \1,500 per year. Sanwa Internet Banking started 24-hour banking in July, Sanwa also offers online banking service in the US, and Asahi and Sakura banks are expected to start limited service soon. Banks, of course, are always queasy about the safety of customers' deposits. So when the prospects of online financial transactions on an open network became a reality, they made sure that the transactions are fully protected using encryption systems such as Secure Socket Layer (SSL) and Secure Electronic Commerce Environment (SECE). However, the recent Internet survey done by my company showed that 44% of respondents believe the Internet is not suitable for financial transactions. This is despite the fact that 96% of those same people said the Internet is suitable for providing financial information, such as stock quotes and currency exchange rates. And most of those who made additional comments in the survey said that they are worried about security. "The Internet is insecure. It scares me to think that my account can be manipulated by hackers," said one respondent. About 40% of the respondents to the survey said that they believe their money will not be secure and they did not trust the banks to protect them. This misunderstanding and misconception is primarily due to a lack of marketing that is clearly needed to inform the public about the security measures banks are taking. These measures ensure that the person who tries to access an account is who he says he is. In most cases, users are required to use a digital ID issued by Verisign or to use SECE and specialized software with a preinstalled personal ID. But customers are also worried about hackers breaking into Web servers. During the past 12 months, there have been cases such as an Internet access provider's database being stolen online by high school students. Or the case of a system engineer working as a subcontractor who reportedly walked off with a floppy disc full of banking data and then tried to sell it to a mailing list broker. With so many headline-grabbing hacks in Japan, consumers are understandably wary. But unlike online shopping, which is increasing in popularity in Japan, online banking is about savings. "If someone breaks into my account and makes false transfers, what is my bank going to do about it?" wrote on respondent to the survey. Banks must answer these questions before they can win the trust of customers on the Internet. However, a more important obstacle to online-banking services is that they are faceless and user-unfriendly. The home pages of many banks do not even have the e-mail address of the customer service representative. Many have online forms to make inquiries, but these forms do not let users keep a record of the message sent like regular e-mail, and the customer never knows to whom they are writing. Some financial institutions do not have contact information displayed on their home page. The first thing prospective customers are going to think is "who am I going to talk to when things go wrong? At least when I go to a regular branch, I can see someone." With no one to answer their questions or to alleviate their concerns, customers will assume that banks have something to hide. Customers don't have to look any further than the banks' dismal record of bad debts to have their suspicions confirmed. The Internet banking survey was conducted between May 27 and July 10 of this year. Of the 40,000 readers of the Bargain America weekly e-mail magazine, 366 respondents voluntarily completed the survey. The survey results can be reviewed on Bargain America's home page at http://www.bamerica.com/. Tom Sato is president and CEO of the San Jose, Calif.-based Bargain America Corp. For a full report on the survey, available in Japanese, or for other comments, contact Tom at tomsato@bamerica.com.
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