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FICO Digital Banking Study: Customer Experience and Fraud Protection

Face to face interactions are currently limited and the battleground for new customers has switched to the digital environment. Those organizations that offer fast, seamless experiences and secure on-boarding might hope to win market share – but even if financial institutions are prepared to make the switch to digital account opening are their customers ready to get onboard?

To understand customers’ perceptions of what matters in digital banking including account openings, FICO recently commissioned an independent consumer survey of nearly 5,000 people across ten countries including:

  • Brazil
  • Canada
  • Germany
  • Malaysia
  • Mexico
  • Philippines
  • Sweden
  • UK
  • USA

When it comes to digital banking, specifically opening accounts digitally, most people in every country surveyed, are prepared to open at least one kind of financial account either on a website, or with an app.

 

When we asked those that are prepared to open accounts digitally what kind of financial accounts, they would open this way, results varied significantly by country. In most nations, people were likely to digitally open bank accounts (such as UK current accounts, US checking accounts, or national equivalents) or credit card accounts.  Taking out personal loans digitally was also popular. Opening mobile phone accounts digitally was popular in many countries, whereas digital account openings for automotive loans varied considerably by country. Financial products such as mortgages, where applications can be more complex tended not to be popular candidates for digital account opening.

 

Myths of the Digital Savvy Consumer

When we look at the percentage that would open a bank account digitally, by age group, the perception that younger people are more digitally inclined may not be accurate. Except for the USA, in all countries surveyed the youngest age group (18-24 year olds) were the least likely to be prepared to open a bank account digitally. When we look at the older age groups, including those over 55, it is apparent that they are as likely - and in some countries more likely -  to open bank accounts digitally compared to their younger compatriots. It may be that a lack of financial experience is driving the youngest adults to seek more face to face help when they start banking.

Are Some Countries Going Straight to App Based Account Opening?

We asked how people would choose to open bank accounts from:

  • Using a bank's website
  • Using a mobile app
  • In a branch
  • Over the telephone
  • By post

The percentages that would prefer to use the telephone or post were very small in all countries – generally just a couple of percent for each. Branch opening is still the preferred method in some countries, but for most, if you take the sum of both digital account opening methods (website and app) together, digital methods were more popular than in branch. It was interesting that for countries where in-branch was particularly popular, account openings using an app were more popular than using a website. It could be that these countries are late adopters of digital account opening and have invested in apps rather than website-based account opening.

The percentage of people that prefer to open accounts in-branch is still relatively high in some countries.  It will be vital for banks in those countries to accelerate acceptance of digital account opening to offset loss of business during the current COVID-19 lockdowns.

Not Meeting Digital Banking Needs - Could Lead to Loss of New Business

When people start to open an account digitally, there is generally an acceptance that they will be able to carry out all tasks related to the account opening digitally, even if that means taking ‘selfies’ and scanning documents. Most people expect to carry out the following activities in channel:

  • Prove their identity
  • Prove where they live
  • Set up a username and password
  • Agree to terms and conditions

Additionally, in many countries a significant number (an average of 43 percent) expect to be able to set up a biometric for future authentication at the point of account opening.

If banks require customers to complete account opening processes out of channel; for example, by posting documents, taking a phone call or visiting a branch, they will likely lose business. While there is some variation from country to country, on average around a quarter of new digital account applications will either be totally abandoned, or the customers say they will switch to a competitor if they cannot complete all account opening tasks digitally. On average only 41 percent of people say they would carry out the requested actions as soon as possible, with many respondents opting to say they would carry out the extra steps eventually.  These figures suggest that forcing customers to act out of channel will lose over a quarter of new account openings instantly, a further 35 percent will be at risk dependent on when (or indeed if) the customer gets around to eventually completing the required task.

Conclusion

While the current COVID-19 crisis may accelerate the use of digital channels for opening financial accounts the idea of digital transformation in banking is not new. This study shows that most people are pre-disposed to embrace it. What is evident is that simply offering digital account opening is not sufficient if it isn’t seamless and can’t be completed from start to finish in channel. Checks such as identity proofing that get in the way are a stumbling block to success if they’re not managed without causing friction for customers.

In my following research findings blog, I will look at how consumers view the methods financial institutions use to authenticate their identities and secure their accounts.

To understand the statistics for the individual countries surveyed download the infographics:

www.fico.com/identity

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