Is consumer education a barrier to banking innovation?

Last week Google announced a partnership with Citizens Advice to offer consumers guidance on online security and privacy issues. Despite the rapid rise in e-commerce and online spending, there are still significant fears about how safe the internet really is. A recent poll by Ofcom found that 26% of UK internet users had concerns about the safety of their personal details, 14% were worried about privacy and 13% about fraud.

But how much is the fear of security a problem when it comes to the adoption of new online/mobile financial tools and services?

Many people regularly shop online, reflected in the Government estimate that a quarter of the £408 billion e-commerce market in the UK is consumer retail. Specifically in financial services, 90% of people now use online banking according to Mcafee, proving that fears around security of financial details are surmountable.

However, there is lots of evidence to show that the perceived risk of newer banking tools, such as mobile apps or mobile web access, remains high. The banks and mobile industry must work together to mitigate the security risks posed by mobile banking. The development of a Secure Element to house encrypted payments and banking information on the phone (much in the same way that the Chip stores information on a bank card) is good example of the progress being made.

However, I think that the Google and Citizens Advice collaboration is a real learning point. Regardless of the technical progress made in terms of security, without consumer education, the perceived risk will remain. The whole industry needs to do more to educate consumers on the reality of using digital services in a secure manner.

James Richards (Director, Mobile - IE)