Online banking growth hit by ID theft fears

The number of people who turn to the internet for personal banking isn't growing - but those who are already hooked on such services are using them more often, a new survey has shown.

The percentage of Americans who conduct personal banking activities online has stagnated at 39 per cent in the 12-month period ending August 2005, Ipsos Insight said in a study released on Tuesday.

The research firm, which interviewed 1,000 American adults for the study, found many consumers were worried that their personal information could either be stolen by hackers and phishers or sold to third parties by banks. Nearly 83 per cent of those who conduct banking online reported such concerns, while 73 per cent of respondents said personal information theft is a deterrent for them.

Doug Cottings, senior vice president at Ipsos Insight, said in a statement: "The industry needs to convey that they are, in fact, addressing the fundamental issues of personal information protection and theft associated with online banking, because the public's misperception is what's deterring growth."

But those hooked on net banking are carrying out more transactions such as paying bills or managing mutual funds and retirement funds, the study found. Also, more people are signing up for new financial and banking services online. Half of all new credit card applications were made online, and about 50 per cent of mortgages, home equity loans and car loans were signed up for online, the study said.

Cottings said: "There are specific ways companies can make online banking a better experience, beginning with assuring customers that their information won't be sold to third parties."

Dinesh C Sharma writes for CNET News.com