Banks’ Identity checks push one in four customers to competitor

9th June 2021

New data from FICO has revealed the levels of consumer tolerance to new account opening security checks. With 23 percent of respondents admitting to going to a competitor financial services provider if asked to visit a branch or post documents as part of the digital application process.

According to the data, if asked to visit branches or post documents,  just over half of customers (52 percent) would complete the process as soon as possible, while nearly one in three (31 percent) will give up completely or go to a competitor.

The risks of abandonment continue when customers are asked to scan documents and email them or use an identity portal. When asked to do so, 17 percent have gone to a competitor, and 8 percent have quit the process.

Consumers between the ages of 25-34 – millennials – are the least tolerant to disruption caused by the ID checking process. 42 percent would abandon the process if it required them to mail documents or visit a branch. If required to scan and email documents or use a separate identity portal, 35 percent would leave the application.

Matt Cox, Vice President for Fraud in EMEA at FICO said “Our data shows intuitive but flexible customer journeys are required,” . “Some people are happy to provide selfies, others want to scan documents. What individuals can do – or can be encouraged to do – is personal. This makes intuitive apps and education crucial if financial services providers are to be successful at new customer acquisition.”

The role of the various digital channels available to consumers is also important for businesses to understand. Age seemed to play a strong factor in choice, as the older people were the more likely they were to prefer websites over apps for opening an account.

Awareness of biometrics is quickly spreading and today most people are open to providing their bank with a facial scan, fingerprint or voiceprint to secure their accounts. A small percentage think banks should never hold biometric data and it is important for many to understand why financial organisations are doing so.

Respondents were asked to select the description that best fits their comfort with biometrics and attitudes towards banks capturing this data. The survey found 38 percent are happy for banks to do so if they explain why, 28 percent are comfortable with banks saving biometrics, and 13 percent said they would provide the data but were not happy about it. Another 13 percent would never provide biometrics to banks or other financial organisations and 9 percent remain unsure.

While older age groups were slightly more likely to say banks should never capture biometrics to protect accounts —17 percent of over 65s compared to 5 percent of 18-24-year-olds — there was generally little variation across age groups in the acceptance and use of biometric security checks.

Consumer understanding of biometrics is, however, the potential weak link in wider online finance adoption.

Respondents to the FICO research were asked to select organizations they believed already had their biometric data. In the UK, while all current passports are biometric and approximately 76 percent of citizens hold a passport, only 27 percent of respondents thought the government held their biometric data. Social media platforms use biometrics to ‘tag’ people in photographs but only 10 percent identified this as an example in the FICO study. And only 17 percent thought they had given biometric information to their phone providers. If the data never leaves their phone the other 83 percent are correct, but if it is transferred and stored then they are wrong.

Cox concluded “Consumers are familiar and comfortable with using their fingerprints to unlock their phones, for example, but do not consider this to be providing biometric data.”

“Using biometrics from a mobile to unlock financial accounts can mean analysis of the biometric takes place at the bank, but customers already familiar with the process might not perceive it as such. Confusion surrounding biometrics is understandable but must be addressed by financial service providers that wish to use this type of data.”

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