As Social Distancing Drives Rapid Migration to Digital Platforms, New Research Confirms the Importance of a Secure, Easy Onboarding Experience

IDology’s Third Annual Consumer Digital Identity Study captures timely insights on how Americans view identity, digital account opening and fraud

In the last six months, an astounding number of consumers have migrated their everyday activities and transactions to online and mobile platforms out of necessity. As digitization accelerates, new research from IDology, a GBG Company, reveals how consumers view identity, digital account opening and fraud. The findings, combined with the changing fraud landscape, are a call for businesses to rethink online identity verification, particularly during onboarding. If ignored, the lost revenue could be significant as the report reveals that in the last 12 months, nearly 50% of consumers have abandoned online account sign-up because the process was untrustworthy or too difficult. Up from 37% in 2019, the abandonment rate has risen year over year.

Read More: Why Does Every Bank Need a Balanced Remote On-boarding Process?

“We’re experiencing a perfect storm in which digital identities are becoming a priority for consumers and businesses are being forced to onboard a rapidly growing number of new customers, many of which are inexperienced with digital transactions,” said Christina Luttrell, COO of IDology. “At the same time, fraud tactics are becoming more plentiful and sophisticated. One of the major impacts of COVID-19 is the pressure for businesses to onboard new legitimate customers safely, which creates problems for those without the proper identity verification systems and processes in place. Now more than ever, success and revenue are tied to a multi-layered defense that can quickly deliver what people want while protecting their information and deterring fraud.”

The need for businesses to understand how these factors impact their ability to quickly greenlight customers and establish trust are further evidenced by these key findings from IDology’s Third Annual Consumer Digital Identity Study:

• Mobile identities are highly regarded and increasingly important but bring added risk. More than half of American consumers (56%) report smartphones are increasingly important to their identities, up from 51% in 2019 and 42% in 2018, which supports the finding that 35 million American adults would be more concerned if their phone number was compromised or stolen than their Social Security number. That said, 25 million American adults with smartphones have had their mobile phone or service compromised in the last 12 months.
• Lack of trust in the identity verification process has negative downstream consequences on customer engagement and cross-selling. When consumers mistrust the identity verification process during onboarding, it not only leads to abandonment, but also to negative downstream impacts on revenue and relationship engagement, such as opting for one-time guest checkouts (54%), being less likely to keep a payment card on file (37%) and less likely to purchase additional products/services (21%).
• Consumers are less likely to engage with a business that let fraud slip through. An estimated 56 million Americans (77%) reported that knowing a business allowed a fraudulent account to be opened in their name could impact the likelihood of initiating a relationship with that company in the future. This indicates the negative brand connotation and ripple effects from new account fraud. Each instance of new account fraud can not only lead to financial loss but also to the loss of a new customer down the road.
• Americans want companies to do more to safeguard their personal information. One hundred forty-seven million American adults with Internet access don’t think companies do enough to safeguard personal identity information, increasing the pressure for businesses to do more.
• Americans are doing more to protect their identities than ever before. Some good news is that Americans are acting to protect their identities as evidenced by strong gains in activation of two-factor authentication. Companies should continue to offer and encourage its adoption and communicate the steps they are taking to deliver a safe and secure onboarding experience while doing as much as they can under the hood with advanced identity verification to make the process seamless.