HSBC data loss has long term loyalty implications
The data protection failings at Europe’s largest bank could cause long term damage to its reputation with customers.
Three HSBC firms were fined more than £3m by the UK’s Financial Services Authority (FSA) last month for failing to adequately protect customers’ confidential details from being lost or stolen.
But the potential longer term damage to customer loyalty could be equally painful according to recent research carried out by Ipsos MORI on behalf of information risk management company ArmstrongAdams.
For example, the survey found that 26% of those described as “wealthy achievers” were “very likely” to switch, ith 60% of people with “moderate means” saying they would be “likely” to change banks as a result of personal customer detail loss.
According to ArmstrongAdams director Tim Kipps: “The recent HSBC case shows that all organisations need to take data loss prevention very seriously. To HSBC’s credit, the firm has acknowledged responsibility and has invested substantially in new procedures and staff training as a result.
“However, our survey clearly shows the continuing concerns that British consumers have with regard to the security of their personal information held by British banks.”
He added that banks and financial institutions of all sizes need to consider the survey’s findings in the light of operational risk, financial risk, reputation risk, market risk and strategic risk. Information is the golden thread that binds together all these forms of risk. By definition, information risk management is a vital part of the constant
effort needed to ensure that business and customer value is created rather than destroyed.
As previously released results from the survey showed, 19% of bank account holders said they were “certain” to switch accounts.