A new survey suggests a sizeable number of online banking customers may soon vote with their feet – rather than their mice – as fears of identity theft begin to bite. Banks and other e-traders should take note, particularly given that online transactions can cut administration costs by huge margins over traditional alternatives.

But if consumers do indeed abandon the convenience of the internet for the hassle of the high street, it will be a sharp reversal. Last year Lloyds TSB saw 70 percent of its customers doing the bulk of their banking online, up steeply from just 18 percent in 2005.

The more likely outcome is that customers will demand stronger, more visible safeguards such as authentication hardware. The problem with this approach will always be in balancing security with convenience. Awkward gatekeeping will turn customers away just as surely as the fear of fraud.

Although banks have been slow to move, it seems likely that most will eventually follow the Alliance & Leicester down the two-factor authentication route. Similarly, other e-traders would be wise not to discount the fragile confidence of their customers.