Financial institutions such as banks and credit unions face serious repercussions should they suffer a data security breach, according to the 2005 EDS financial services privacy and customer relationship management survey.

According to the poll, 21% of respondents say they would close all accounts and move their business to another financial institution if their personal information were compromised, a further 7% would close some accounts and use another bank, and 54% would discontinue banking until they felt the crisis was resolved.

“The consequences are severe for any financial institution that experiences a security breach that leads to a leak of personal information,” says Chris Lord, EDS’ senior vice president, Canadian Financial Services industry. “Our survey clearly shows that consumers demand strong security and privacy measures, and banks and other financial service providers must rise to the challenge or risk losing their customers.”

The survey, commissioned by EDS Canada Inc. and conducted by Ipsos Reid, evaluates customer habits, perceptions and requirements concerning the use of their personal information by the financial services industry.

According to Lord, the survey demonstrates that consumers are acutely aware of how their personal data is protected and they have intense opinions on their privacy rights.

Survey results indicate that consumers are wary of having their personal information used for marketing purposes. While 45% do not agree that financial institutions should be performing data analysis and mining their personal information to develop personal financial profiles, less than 17% object to receiving unsolicited advice that is based on such profiles. This indicates a willingness on the part of consumers to receive advice that they perceive as valuable, while at the same time highlighting concerns about the practice of profiling.

While 95% say they believe financial institutions do not have the right to share any personal information with third parties, consumers are willing to let their financial institutions share some personal information with their affiliate organizations.

The information consumers are willing to disclose to affiliates include email addresses (38%), number of years with the bank (36%), number and type of bank accounts (29%), investor profile (30%), number and type of investment accounts (30%), assets and personal worth (25%) and account balances (24%). Some 40% of respondents ndicate they are very confident in their financial institution’s ability to protect their privacy and 54% said they are somewhat confident. And 86% of those surveyed use online banking and financial services, citing convenience and ease of use cited as the greatest benefits. Of online users, 59% said they do more than 70% of their banking functions online, although they recognize threats associated with online banking, identifying as most significant risks identity theft (733%), risk of network, transaction and account intrusion attacks (61%), fraud (58%), phishing (41%), insufficient encryption of sensitive data (41%) and insufficient data security policy and enforcement (31%).