Continued data breaches have increased the risk of fraudulent applications. With easy access to an unprecedented depth and breadth of consumer data, it is now easier for criminals to steal identities or synthesize fake ones. This means that banks must be ever more vigilant about who they open accounts for.
Unfortunately, increased scrutiny on account applications has a downside — the inconvenience caused to legitimate customers who want to open an account with you.
We wanted to know what impact security measures and identity checks have on customers opening bank accounts, so we commissioned an independent survey of 2,000 US adults to find out.
Go FasterThe majority of Americans who took the survey, over 80%, have at least one online bank account and when they open an account they expect access to it fast — 74% expect access the same day. This need for speed is not being driven by younger people; until you get to the over 55s, the older the person the more likely they are to expect access to a new account within an hour.
It Should All Be OnlineWe asked which actions needed to open a bank account applicants should be able to do online. Not surprisingly, most thought that those processes that have long been common in online interactions — such as setting up a user name and password and agreeing to terms and conditions — should happen online. It was interesting to see that almost half of people also expect to carry out processes online that previously would have been done offline. 48% expect to be able to prove their identity online and 48% also expect to prove where they live online.
In general, the youngest group surveyed, those aged 18-24 had lower expectations of what could be done online. Some 43% expect to be able to prove where they live online, as opposed to 52% of 35-44 year-olds. Similarly, 47% of 18-24 year-olds expect to be able to prove their identity online compared to 58% of 25-34 year-olds. This may not be because the younger adults are less digitally savvy, but because they have less experience of banking, or know they have less of a digital footprint to help them prove their identity and address.
Despite lower expectations of what can be done online, more younger people were prepared to open a bank account in this way. Only 15% of 18-24 year olds wouldn’t open a bank account online, compared to 30% of those aged over 55.
Failure to LaunchDelays in the account opening process are often caused by fraud and security considerations. Either the checks needed to set up an account introduce friction, or suspicion of fraud stops the process while additional checks are made. The good news is that 97% say that they understand the importance of security measures; the bad news is that 81% think that there are too many security measures that are unnecessarily overcomplicated.
Unfortunately, when faced with disruptions to account opening, many will choose to abandon their application.
We asked what respondents would do if they were asked to complete the application via a different channel, for example taking a telephone call, posting documents or visiting a branch to complete the application. 10% would give up on the application completely and another 12% would give up with you and try again with a competitor. That’s 22% of applications lost as soon as you take an online application out of channel.
In addition, 13% would only get around to doing what was asked eventually. 37% said they would fulfil the request as soon as possible and complete the application. The bottom line: Disrupting an online application could lead to the loss of over a third of your potential new customers.
Customer Protection vs. Customer ExperienceFraud departments are engaged in a delicate balancing act, preventing application fraud without turning away legitimate customers. Fortunately, the technology and techniques needed to help them are available. My colleague Liz Lasher has written a series of blogs about application fraud, the challenges and the solutions. Her blog on using machine learning and artificial intelligence to fight application fraud will tell you about some of the techniques our customers can access to help them.
The statistics in this blog are just some of the many to come out of our research. To see more of the stats around application fraud in the US, download the infographic.