2011 Business Banking Trust Study

This Executive Summary presents the results of the Second Annual Business Banking Trust Study. Our research reveals continued bad news.  In the last year, the industry has not moved the needle in addressing the corporate account takeover and fraud plaguing small-and-medium businesses (SMBs) and their financial institutions. And in this case, no news is bad news.

Responses to the February 2011 survey from more than 533 SMBs indicate that money continues to be siphoned unnoticed from business accounts at an alarming rate and SMBs are leaving their institutions at alarming pace because of it.  This means financial institutions are facing a lose-lose proposition: losing money and losing customers.

The silver lining is that within the bad news is a big opportunity. Banks can take control of the situation with more proactive fraud prevention strategies that will improve their relationships with customers and save them money in the long run. This is particularly important as businesses look to expand their banking activities to more devices outside their offices.

Highlights include:

Fraud Attack Rate: 56% of businesses reported experiencing payments fraud or attempted payments fraud in the last 12 months. 75% of businesses have experienced account takeover and fraud in the online channel. These rates are the same as they were in 2010, indicating banks and businesses are struggling to make progress on the issue.

Fraud Detection Rate:
In 78% of fraud cases, banks failed to catch fraud involving the illegal transfer of funds or other nefarious practices such as information identity theft.

Responsibility and Liability: 41% of respondents said that in their opinion, the bank would not cover any losses if their company’s bank assets were stolen and not recovered. This perception increased from 26% in 2010. Despite this increased awareness, 70% of businesses still feel that their institution should be ultimately responsible for securing online accounts.

Customer Churn: 43% of businesses said they have moved their banking activities elsewhere after a fraud incident. 10%of businesses that have experienced fraud have terminated their banking relationship following fraud attacks, and additional 33% said they did not fully terminate their relationship, but moved their primary cash management services to another institution.

The Guardian Analytics 2011 Business Banking Trust Study includes more details on SMBs’ online banking behavior and their views of banks’ security practices including accountability and end-user education practices. It also provides recommendations for banks and businesses to better prevent fraud.

 2011 Business Banking Trust Study