Osborne Clarke survey on financial privacy concerns ahead of PSD2
Confidence in the security of smartphone payments has fallen sharply in the EU. 81 percent of consumers are afraid that bank details will be misused for fraudulent purposes. That is an increase of 12 percent in one year. Consumers in the Netherlands are slightly less suspicious: 73 percent indicate that they are concerned about fraud in mobile banking, an increase of 3 percent. This was shown in research conducted by international law firm Osborne Clarke in eight European countries.
Chart I – Concerns about fraud in mobile banking
Percentage of respondents in 2016 (green) and 2017 (blue) who are “fairly or very concerned” about fraud if mobile payments completely replace cash payments in the future.
More concerns financial privacy
Among Dutch people, however, there have been significantly more concerns about privacy regarding private data in the past year if cash payments are no longer possible in the future. Two out of three people indicate that they fear that too much personal data will be shared. An increase of 13 percent compared to the survey a year earlier. Dutch consumers also have little confidence in the data security of banks. Almost three quarters of the respondents (73%) are concerned about possible data breaches that could lead to private data being leaked.
In the rest of Europe there are similar results: after fraud (81%) comes concern about data leaks (80%) and sharing personal data (76%). Striking: hardly anyone has become less concerned. Whether men or women, people over 50 or young people.
Chart II – Concerns about privacy private data with mobile banking
Percentage of respondents in 2016 (green) and 2017 (blue) who are “very or fairly concerned” about privacy private data if mobile payments completely replace cash payments in the future.
Better security controls
The new European Union Payment Services Directive (PSD2) is expected to take effect in the Netherlands this summer. One objective of PSD2 is to increase the security level of mobile and online payments. To this end, PSD2 requires strong customer authentication in a number of cases, such as when the customer requests the bank to share payment data with certain third parties.
Osborne Clarke investigated which methods for customer authentication are preferred. The majority of Dutch consumers (56%) feel comfortable with fingerprint scanning and conventional passwords (57%). Many Dutch people are still reluctant to use voice and face recognition, 17 percent and 23 percent respectively feel comfortable with these forms of identification.
The year of mobile payments
“A recent survey by ING showed that 34% of EU residents say they would like to go through life cash-free if they had the choice,” says Johannes de Jong, Head of Financial Regulatory at Osborne Clarke. “After contactless PIN payments, the move to contactless payments with your mobile is a logical next step. However, instead of more trust we are seeing a growing mistrust in the guarantee of our financial privacy. Partly due to the various companies and institutions that were negatively in the news last year with data breaches and the violation of customer data.”
De Jong continued: “Biometric authentication techniques such as fingerprint and iris scanning play an important role in countering fraud in online and mobile payments without negatively affecting user convenience. However, concerns about possible data breaches and the improper use of customer data, including account information, will not go away just like that. Although PSD2 and the forthcoming new General Data Protection Regulation regulate exactly that, it is up to companies and institutions to address the concerns of consumers. Actively and continuously informing them about how customer data is used and protected is crucial for this.”