Are Banks Giving Digital Customers the Online Privacy Controls They Demand?

As concerns over cyber threats, identity theft, and online scams reach record highs, modern consumers are looking for ways to limit their digital footprint. Yet, many financial institutions are falling short when it comes to giving customers direct control over their personal data.

According to research from Keynova Group, only about half of leading retail banks allow new customers to customize their privacy preferences within the authenticated online banking portal when applying for a checking account. Even fewer—just 30%—let applicants choose how often or through which channels they receive promotional offers.

This gap represents a missed opportunity. Susan Foulds, Managing Director at Keynova Group, emphasizes that banks still hold a unique trust advantage over non-bank financial firms. By implementing transparent privacy practices and giving users control over data sharing and marketing communications, banks can secure and strengthen this competitive edge.

The Digital Banking Trust Gap

In evaluating the user experience of major financial institutions, Keynova’s research shows that traditional banks are generally less intrusive with customer data than aggressive fintech platforms. This naturally positions banks as more secure partners. However, to fully capitalize on this reputation, traditional institutions must offer robust, user-friendly digital privacy settings.

Key takeaways from Keynova’s recent Online Banker Scorecard include:

• Improved Onboarding: Leading institutions have upgraded their online enrollment processes, making channel-switching smoother for omnichannel banking.
• Customer Support Gaps: While online help options have grown, some banks still direct new applicants to automated phone systems that require an account number—which the applicant does not yet have.
• Feature Convergence: Features once lost during the mobile-first design shift are returning as online and mobile platforms merge into unified digital experiences.

Balancing Disclosures and Control

Effective digital privacy involves two distinct elements: clear disclosures and functional user controls. While most institutions provide a link to their privacy policies during the application process, few explain exactly how they intend to use the applicant’s contact details. Only 40% clearly explain how they will use email addresses, though nearly two-thirds outline the use of phone numbers.

Without clear control, signing up for banking services can trigger a barrage of unwanted texts and emails. To combat this, leading institutions are giving consumers granular settings. For example, JPMorgan Chase is highlighted as a market leader for dividing privacy and marketing preferences into clear, dedicated screens. Customers can toggle specific types of marketing on or off and easily adjust data sharing with affiliates.

Industry best practices suggest keeping these controls directly within the digital platform rather than forcing users to opt-out via phone or mail. Additionally, allowing users to temporarily hide account details on-screen protects their privacy when accessing banking apps in public spaces.

How to Prevent Checking Account Application Abandonment

A primary driver of digital application abandonment is a lack of clarity regarding what documentation is needed to complete the process. Top-tier banks mitigate this by listing all requirements upfront—such as government ID, Social Security numbers, and external account details for funding—before the applicant begins.

Other effective strategies to reduce abandonment include:

• Progress Tracking: Visual progress bars help set expectations; currently, 76% of surveyed banks utilize them.
• Easily Accessible Help: Providing direct customer service access within two clicks. Keynova found that 59% of banks offer live phone support during enrollment, while only 35% offer live chat.

Fintech vs. Traditional Bank Onboarding

When comparing traditional banks to digital-first giants like SoFi and Chime, distinct philosophies emerge. Interestingly, both analyzed digital-only brands lacked upfront document checklists, a surprising omission for brands built on digital convenience.

Furthermore, digital-only platforms tend to utilize many more screens with fewer fields per page. For instance, Chime’s onboarding flow can span over 16 individual steps. While traditional banks try to streamline by grouping information on fewer pages, fintechs favor a “one-thing-per-screen” approach to make the application feel lighter and less intimidating.

Ultimately, traditional banks that combine their innate trust advantage with modern, user-controlled privacy settings will be best positioned to win and retain digital customers.

Source: thefinancialbrand.com