FICO Survey: UK Banks Face Consumer Frustration Over Customer Identity Management

Customers want fully digital process, but integration of identity systems is a concern for more than half of UK banks

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Fraud Protection & Compliance

London, 2 November 2020 –


  • Consumers have moved to digital channels; but lack of integration across channels is a challenge for banks’ identity verification
  • Current identity verification methods are not fit for purpose in the digital age: a significant proportion of digital account opening still requires physical identity document verification in branch or by mail
  • 72 percent of banks use digital methods to capture identity for current accounts but only 36 percent capture and verify identity in the same channel – for mortgages, credit card and loan applications, digital identity verification is used even less
  • 32 percent of UK consumers will abandon an application process if forced to take action out of channel

A new study by global analytics software provider FICO has highlighted the biggest barriers to digital interaction between bank and customer at a time when digital has become ‘king’. According to the data, based on a survey of decision makers by independent research firm OMDIA of 172 banks across 8 countries, including 27 UK banks, the inability to complete identity verification online is a stumbling block for banks.

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“Historically, identity solutions were developed for face-to-face interactions and have since been adapted to the needs of new channels and products,” explained Sarah Rutherford, senior director of identity fraud marketing at FICO. “As digital interaction is accelerated by the impact of COVID-19, it exposes the weaknesses inherent in using identity verification processes that were not intended for digital channels.”

Consumers Want Fully Digital Account Opening

A FICO consumer study conducted earlier this year found that consumers have a strong appetite for digital interaction. Most people in the UK (82 percent) are prepared to open accounts digitally. But consistency of identity validation across channels is a challenge for 54 percent of UK banks.

According to the FICO-commissioned study, whilst 72 percent of UK banks use digital methods to capture identity for personal bank accounts, they are not integrated into a seamless experience. Only 36 percent of banks said they capture customer identities and verify them in the same channel. A lack of integration means that only 29 percent of document capture is integrated into the same channel, leaving clients much more likely to abandon an application, for example after being forced to download another app or  scan and email documents.

Indeed, the FICO consumer study found that nearly one in three UK consumers (32 percent) said they would abandon an application process if forced to take action through a non-digital channel. Yet only about 7 percent of banks surveyed have adopted a streamlined approach with capture and verification methods fully integrated, in real time, into the digital application process.

Banks in the UK also noted challenges around authentication of existing customers, including complying with legislation. This was a concern for 54 percent of respondents, probably driven by the Payment Services Directive 2 (PSD2), which establishes technical and operational rules around verifying the real payer, both for banking and payment card accounts. The lack of integration between authentication systems across customer channels is a concern for half of UK banks.

Banks Missing Important Data

Lack of the right customer information is another big stumbling block for banks in the digitalisation arms race. Up-to-date contact information is crucial for one-time passwords (OTP) or codes for customer and payment verification, a common strategy for PSD2 compliance. Yet only 83 percent of UK consumers in a prior FICO survey said their bank has their mobile number, and a third of banks say they have contact data for less than 70 percent of their customers. When PSD2 forces the use of Strong Customer Authentication to secure e-commerce transactions, this could mean a failure rate that isn’t acceptable to merchants or their customers — who are likely to blame the bank that issued the debit or credit card the customer tried to use.

“Our new study shows that banks need to move fast to work out how identity fits into their digital onboarding and authentication strategies,” concluded Rutherford. “The fragmented approach is impacting the customer experience. The benefits of moving to a single identity infrastructure across all channels and product lines should be assessed as a matter of priority. This approach reduces unnecessary friction and confusion for customers, avoids multiple copies of documents being held across the institution and facilitates faster onboarding of cross-sell opportunities. Banks that still rely on processes first developed for branches will be disadvantaged.”

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About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956 and based in Silicon Valley, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 195 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and rental cars are in the right place at the right time.

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