Consumers prefer security over service when choosing banks

Global analytics software platform provider, FICO, released findings of a survey exploring the shift in consumer expectations on how financial institutions manage fraud.

The Consumer Survey 2022 found that consumers expect a strong fraud stance from financial institutions as part of the customer experience, both physically and digitally.

The report found that 40% of Americans surveyed either know or believe their stolen identity may have been used to open a financial account, of which 12.7% are definite this has happened.

The report also found that many think that falsifying information in applications is okay to gain credit. The risk of first-party fraud is high, with about a third of consumers saying that exaggerating income on applications for financial accounts is acceptable in some circumstances or even normal behavior.

American consumers continue to embrace digital banking — 73% of respondents are more likely or just as likely to open an account digitally than they were a year ago. In fact, the report found that good fraud protection was the top consideration (33.1%) when opening a new financial account with ease of use (31.6%) coming in at a close second.

However, banks need to be mindful of the security processes, as overtly tedious processes could affect the customer experience. The report found that 74% of consumers say they understand that banks need to perform identity checks to protect them from fraud, but consumers’ patience with identity verification processes has a limit. A quarter of consumers (25%) have abandoned application processes for financial accounts because the identity checks in the sign-up experience became too complex. Biometrics are a favorite security choice with consumers preferring to use fingerprint scan (36.4%), followed by face scan (34.3%) and username and password (33.7%).

“Financial institutions are feeling the burden of finding the balance between safety and customer-centric experiences,” said TJ Horan, vice president of solutions product management at FICO. “With fraud increasing and consumers’ needs changing, it’s more important than ever for institutions to prioritize and implement seamless customer experiences that protect against identity-based frauds.”