At a time when 80 percent of apps ask for (and are usually given) users’ geolocation data, the fact that most mobile banking applications still don’t is unacceptable, GeoGuard CEO David Briggs told Karen Webster in an interview.
“Two-thirds of all banking apps don’t ask for location at all,” Briggs said. “They’re not even in the ball game. But the consumer doesn’t even know [banks] haven’t asked for location. The consumer is conditioned to think that they have because every other app does.”
But he said that in some cases, banks fail to do so because a customer’s initial download of an app didn’t request it, or possibly because users might have switched off location permissions on their smartphones.
“If people don’t see requests for location from their app, they probably think they’ve already blocked it, but they don’t know that the bank never actually asked for it,” Briggs said.
The banking industry’s explanations for not using geolocation don’t cut it, Briggs said. Given the importance of banking, the growing prevalence of online banking and the inherent confidentiality of banking-related personal data, he said he sees the failure to use geolocation — a common but high-value fraud deterrent — as inexplicable.
In fact, Briggs noted that research shows that not only do customers expect it, they want it.
“I think [consumers] recognize that if location is not being asked for or provided, then that app is inherently not as secure as it could be,” he said.
A Rude Awakening
Unfortunately, most consumers only learn of this location loophole after something bad happens, such as a stolen credit card or a fraudulent transaction, Briggs pointed out.
“What I’ve heard multiple times is, ‘Why did [the bank] think I was in Detroit? I’ve never been to Detroit. Why did they let that through?'” he said.
That’s a valid concern — and an understandable source of customer anger. And it’s not only a huge source of costly write-offs and chargebacks for banks, but one that can cost institutions their customers.
“I think consumers feel that if the bank isn’t paying attention to [something like] that, it’s not good enough,” he said. “Consumers who are a bit more savvy say they want a bank that’s going to be more diligent.”
Disclosing Location Not A Big Deal To Most Consumers
Briggs said that in the realm of high-value personal information that hackers look to exploit — such as name, date of birth and Social Security number — a user’s location is “the bottom rung” for many customers.
“If a bank loses your data, geolocation data is probably one of the very least valuable things,” he said, noting that many customers freely share their locations with all sorts of other companies.
For example, allowing Uber to know one’s current location is critical for the app to work properly. So, the company simply promises to never share or sell location data to third parties. Briggs said consumers are fine with that arrangement, as it enables a car to come get them exactly where they are.
Given banking’s obvious privacy and security concerns, Briggs said it’s actually more logical for banking apps to request location permission than to not ask for it. Additionally, most consumers already know and trust their banks.
“My view is the same for any company in regard to location data,” he said. “If you treat that data with respect and use it for the purposes that you say you’re going to, you have nothing to worry about.”
Fear Of Friction Vs. The Importance Of Customer Retention
Consumers constantly tell banks they want them to be more careful about data and tighten their security, yet financial institutions still worry about placing any friction in between people and access to their money.
Despite such concerns, Briggs said he has seen no evidence to suggest that banks shouldn’t investigate how location data can improve security.
“Consumers already think they’re giving that data to the bank; they don’t know that they’re not,” he said. “So, it actually erodes trust when they find out.”
But ultimately, it will be consumers who change the way banks act rather than the other way around, he noted. That’s especially true since many customers have come to have a certain expectation for how digital transactions should look and feel.
And when they don’t get that experience from their current banks, research shows they won’t hesitate to leave for another one.
“I think there is a clear desire among the more technically advanced consumers such as millennials and Gen Z to switch to a bank that is utilizing location data to stop fraud and secure their accounts,” Briggs said.