Wells Fargo Online Redesign

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October 15, 2003
The Clean Little Secret-New Research Shows How
Electronic Transaction Use Reduces Risk of
Identity Theft
James Van Dyke Founder and Principal Javelin
Strategy and Research
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Confessions of a Pragmatist

• Im a misfit here (but I keep coming back)
• My belief cool technologies often meet with a
  similar market reception.
• Seek to fulfill demands, not desires
• This session is focused on markets, needs and
  problems, in order to find a home (read ) for
  technology (identity and otherwise)

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While Latecomers are Seated

• In the data world, payment data is of paramount
  importance
• In the face of regulatory inaction, market
  solutions thrive
• SSN lost opportunity.
• Handheld devices and payment cards merger of ID
  and money?

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One More While We Shuffle In

• Quick history of online payments
• Days of yore shells, wheels, etc
• 1800s metal tokens
• 1900s store credit cards
• 40s regional credit tokens, driving new
  identity and directory needs
• 50s/60s universal credit cards
• 90s numerous geeky trials of e-payments
• Now Rampant epayments fraud in some online
  sectors
• Security solutions are failing to return ROI
  because their value is not universal, and in any
  event cannot be properly assessed.

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Payments and Identity Over Time
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Top Rankings

• Fastest Growing Crime Identity Theft (FTC)
• Fastest Growing Internet App Bill Payment (along
  with Online Banking and Online Statement Viewing)
• Percent of Articles Where Reporters Finger
  e-Transactions as Identity Thefts
  Culprit 100

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Despite Big Growth, Electronic Bill Payment
Volume Remains Small
Bill Payment Methods
Source 2002 USPS Household Diary Study
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Why Consumers Dont Access Bank Accounts Online
Earlier you indicated that you do not access your
bank accounts online. Which of the following
describes why you have not done so?
Percentage of Those Who Do Not Access Account
Online
Source Javelin Strategy Research (5/03), n
2,877 (those who do not access account online)
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Hidden Costs of Identity Theft

• So is anyone surprised that
• FEAR
• is a big, costly barrier to adoption?

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The Reality

• There IS a lot of fraud on the Internet
• Fraudsters and Security experts have been playing
  cat-and-mouse for years
• Fraudsters and Prevention experts must constantly
  out-innovate one other
• Government and industry-coalition actions are
  ineffective. Who will lead? Who can you trust?
• Consumers are unable to determine which actions
  will decrease their personal risk. Therefore,
  despite benefits and incentives, they resist
  change.

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Identity Theft Costs

• Average to businesses 4,800
• Average to individuals 500 (out of pocket)
• Average time to individuals 30 hours per case
• With any serious personal injury, time spent
  worrying greatly outweighs time spent in
  affliction or recovery.
• Example lightning strikes and shark bites affect
  few, but the fear is nearly universal

Data Source FTC Identity Theft Survey Report,
9/03
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New Account Fraud Less Prevalent, More Costly
Source FTC Identity Theft Survey Report, 9/03
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New Accounts Opened by Identity Thieves
Percentage of New Accounts Opened by Identity
Thieves
4E
Source FTC Identity Theft Survey Report, 9/03
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How Criminal Obtained Personal Data (from Those
Able to Identify the Source)
Where EBPP Obviates Shredders -Javelin
Where Prevention Is Vastly Improved -Javelin
4A
Source FTC Identity Theft Survey Report, 9/03
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Existing Account Fraud More Prevalent, Less
Costly
Source FTC Identity Theft Survey Report, 9/03
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How Victims Discovered ID Theft
Detection Is Greatly Improved Here -Javelin
Despite sophisticated fraud detection systems,
most identity theft is discovered by the victim,
when they view an mailed paper statement!
Source FTC Identity Theft Survey Report, 9/03
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How Electronic Transactions Help Block Identity
Theft
Source FTC Identity Theft Survey Report, 9/03
Javelin Strategy Research Analysis, 10/03
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Education is Needed

• FACT-based consumer awareness
• Fraud occurs in every channel
• Paper should not be equated with safety
• Just because fraud occurs online, doesnt mean it
  was caused online
• Even offline consumers can be a victim of
  online fraud
• Much online fraud starts (or is prevented)
  offline.
• Consumer tips should include online
  recommendations
• Online statement viewing, bill payment, and
  banking can reduce overall risk of identity fraud
  by over 10
• Current available US economic benefit is 4.86B
• With greater industry participation, this figure
  will rise

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Thank You
jvd_at_javelinstrategy.com
For information about the report
http//www.javelinstrategy.com/rp.html