Is consumer confidence in the banking system failing?

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By: Wise Marketer Staff |

Posted on July 31, 2002

The struggling economy and high-profile problems in corporate America have knocked consumer confidence in the banking system down from an all-time high, according to the 2002 American Banker-Gallup Consumer Survey.

The percentage of consumers who said they currently have a great deal of confidence in the safety and security of the US banking and financial system fell to 40% from a record high of 47% last year.

At the far end of the scale, almost 7% said they have "very little confidence" in the system, up from 5% in 2001, and the percentage of those with "no confidence" in the system doubled to 2%.

A mere 18% of consumers felt that the banking and financial system was very healthy, down from 22% from last year, and those whose consider it fairly healthy fell to 64%, compared with 67% previously. The percentage of Americans who feel the system is fairly unhealthy has doubled to 12%.

Internet increase
The report also found some good news for banks and financial services companies: It seems that efforts to persuade consumers to use online services are at last showing good results, with nearly 33% of consumers with a personal computer at home saying they have used it for online banking transactions (up from 22% last year). The number of Americans paying bills via the internet has increased to 15%, compared with 10% in 2001.

"This data shows that - despite the bursting of the NASDAQ bubble, and the decline of things like online brokerage - financial technology owns, and will continue to own, a strong position in the lives of consumers," says David Longobardi, American Banker's editor in chief.

Wireless services
When it comes to wireless financial services, the report suggests that consumers are not particularly interested. Although some 66% of respondents own or use a mobile phone or personal digital assistant, only 17% of them were interested in conducting financial transactions using those devices.

On the subject of financial privacy, one year after banks and other financial services companies sent millions of privacy notices to customers to comply with federal law, the survey found consumers are still not convinced their financial institutions can be trusted when it comes to data privacy. Some 23% said they thought a bank had violated their financial privacy and, even when people did not think a violation had occurred, the survey found that people are still generally worried about this area. Nearly 62% of consumers expressed concern that their primary financial institution may release their personal financial information to other companies without their permission.

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