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New FICO Survey: Americans Value Financial Fraud Prevention More Than Banking Customer Experience

New FICO Survey: Americans Value Financial Fraud Prevention More Than Banking Customer Experience

A new report from FICO focusing on consumer perception of how financial organizations manage fraud and identity verification found that fraud protection is top of mind for American consumers

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

“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.”

The Consumer Survey 2022 surveyed more than 14,000 consumers across 14 different countries worldwide, including 1,000 consumers in the United States, and found that consumers expect a strong fraud stance from financial institutions as part of the customer experience (CX), both physically and digitally.

The report found that 40% of Americans surveyed either know, or believe their stolen identity may have been used open a financial account, of which 12.7% are definite this has happened. Based on the US population, that could equate to 32.8 million people. Although consumers in the older age brackets are often thought of as the target of fraud, the survey found that respondents aged 35-44 and 25-34 are the most likely to be victims of identity theft.

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Interestingly, with finances stretched in these inflationary times, many think that falsifying information in applications is okay to gain credit. The report found that 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.

Fraud Protection Top of Mind for Consumers

American consumers continue to embrace digital banking, almost three quarters (73%) of respondents are more likely or just as likely to open an account digitally than they were a year ago. Conversely, only 1 in 10 people (9.6%) would not open an account digitally.

In fact, the report found that good fraud protection was the top consideration when opening a new financial account. The top five considerations when selecting a new bank account were:

  • Good fraud protection (33.1%)
  • Ease of use (31.6%)
  • Good value for money (16.1%)
  • Good customer service (7.7%)
  • Ethical use of consumer data (5.4%)

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.

“Financial institutions are feeling the burden of finding the balance between safety and customer-centric experiences,” says 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.”

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Finding a Balance

Consumers’ expectations have evolved considerably in the past 24 months, and banks need to find the right balance of increased protection, without creating too much friction during the online experience.

More than two-thirds of today’s consumers (69%) expect to spend less than 30 minutes opening a checking account. The need for smooth processes doesn’t end at account opening as a quarter (25%) of respondents reduced or stopped using a credit card because of difficult or time-consuming identity checks.

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%). Interestingly, while fingerprint and face scans were also considered to offer excellent protection, less than a quarter (24.5%) thought the same about username and passwords, despite being the third highest preferred choice to protect their account.

“Fraud protection needs to work across every customer interaction from account opening onwards. When fraud functions operate in siloes there are inefficiencies that increase cost and duplications that frustrate consumers. Fraud teams must constantly balance fraud prevention with the needs of legitimate consumers for a great experience and fast account opening. Leveraging a platform strategy allows your team to orchestrate fraud solutions based on logical workflows that cover multiple processes,” added Horan.

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[To share your insights with us, please write to sghosh@martechseries.com]

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