The need and desire for fraud protection has evolved. Once simply viewed as a necessary overhead, good fraud prevention measures are now a very strong way of obtaining new customers and keeping existing ones. In fact, nearly three in four consumers (73 per cent) rank good fraud protection as a top three consideration when opening a new account according to FICO research.
FICO, the analytics company, published a report, titled Fraud, Identity, and Digital Banking Consumer Survey 2023 – United Kingdom uncovering Brits’ attitudes towards fraud and cybersecurity measures. It reveals at what point consumers decide to stop their onboarding process due to complicated measures.
“Financial institutions should use fraud protection as a competitive advantage,” commented James Roche, a principal fraud consultant at FICO. “Customers are looking for providers they can trust, so institutions should shout about the excellent fraud protection they provide. But when it comes to application and onboarding, they must be sure those protections, fraud checks and identity proofing are appropriate, proportionate and time-efficient to reduce the chance of dropouts.”
While 73 per cent of consumers said fraud protection was a top three concern when opening a new account, 34 per cent ranked it as a top priority. Biometrics were a top choice for security measures with 68 per cent preferring to use fingerprints. Just a few years ago biometrics was an unknown science for consumers. The FICO research shows the shift, as 54 per cent believe fingerprint scans provide essential protection; 52 per cent ranked face scans and 49 per cent iris scans.
However, more education is still needed on behavioural biometrics, with just 17 per cent believing these provide excellent protection.
Complicated, but not too complicated
However, firms must walk a fine line as making identity checks too complicated would result in account opening abandonment as almost one in five (18 per cent) said over-complication or time-consuming set-up put them off opening a new account.
Whilst 34 per cent said they are more likely to open a financial account digitally than they were a year ago, the expectation for a frictionless experience has also increased. Consumers expect the application process to be fast. Almost one in five will abandon an application if the checks are too difficult or take too long. Two-thirds expect to spend less than 30 minutes opening a current account.
“If one place in the onboarding process sees a high proportion of dropouts, FIs should consider altering the order in which checks are made and whether some could happen once the customer has been accepted,” added Roche.
Biggest fears
The FICO report also identifies the financial crimes that consumers are most worried about. Identity theft to open a new account is the top-ranked concern at 30 per cent. Bank account takeover was ranked the crime most feared by 20 per cent of respondents. In third place, 16 per cent ranked being tricked into sending money to a fraudster as the top concern. Giving customers confidence that a financial institution is using the best processes to mitigate against these threats is, therefore, critical.
“Aiming for completely frictionless experiences could leave a financial institution over-exposed to fraud,” concluded Roche. “Indeed, appropriate friction can actually help customers feel protected. The reality is, checks must be proportionate and personal to each customer and interaction. Therefore, fraud protection needs to be adaptive. It must use all streams of customer data for the best outcome for the customer and the institution.”
Francis Bignell
