nCino and IDology have teamed to deliver value to financial institutions navigating the risks and opportunities in the brutally unforgettable, transformative year that is 2020. With that, we have new market data about consumer onboarding preferences and COVID-19 related fraud trends that we are exclusively sharing for the first time. Sharing earned best practices and actionable market insights, along with innovative solutions, is what makes IDology unique. We hope this first look at new data provides visibility into advancing business and gaining a competitive edge.
When we speak to our financial institutions customers, it goes without saying that as a result of the COVID-19 pandemic many of them have found themselves forced to support their customers without the use of their branch networks. This includes the need to open new accounts.
To overcome this challenge our financial institution customers are using processes and technology that allow for the gathering of relevant data to support the new account opening process, without inserting excessive friction. While doing so, they must also establish trust, which is at the heart of business, especially consumer banking. So how do financial institutions open new accounts while balancing the need for security with simplicity?
A Lack of Tolerance for Convoluted or Flawed Approaches
In March we conducted our third Annual Consumer Digital Identity Study, involving 1,499 individuals, aged 18 and older, to provide a representative sample of all U.S. consumers. The findings provide insights regarding Americans’ preferences and practices related to identities, security, convenience and how those elements impact onboarding and engagement within the financial services sector.
When asked if they would have a preference for a financial institution that employed more advanced identity verification methods, 77 percent of those surveyed noted that it would make a difference. Yet when asked if they think generally companies do enough to safeguard their personal identity information, 64 percent did not believe companies did enough. So, while consumers want security, many don’t see companies providing it.
To underscore the importance of striking a balance between too little and too much security, 47 percent expressed a strong dislike for companies that require additional steps during identity verification or authentication situations.
With security in mind, we wanted to know how many survey participants had abandoned signing up for a new online account because the process was too difficult, too time consuming, or did not seem trustworthy. Forty-eight percent stated that they had abandoned the sign-up process for one or more of those reasons, up from 37 percent in 2019, and 31 percent in 2018.
Mobile Phones: An Important Yet Vulnerable Component of Identity
When it comes to banking online, not surprisingly, mobile phones play an important role in the digital environment. When asked whether they consider their mobile phone number as an important part of the personal identity, 56 percent agreed, up from 51 percent in 2019, and 42 percent in 2018.
We also found that Americans are increasingly worried about the threat of malware as it relates to their smartphone, with 26 percent responding that they are extremely concerned with the threat, while 21 percent were very concerned. Nonetheless, while many expressed concerns regarding the threat of mobile malware, we estimate that 105 million American smartphone users either do not have or do not know if they have virus protection on their device.
Along those lines, based on our study, we determined that approximately 25 million American smartphone users have had their mobile phone or service compromised. Additionally, 23 million have lost their mobile phone or had it stolen.
To provide visibility of the channels that may need refinement to reduce new account opening abandonment rates, we asked which device the survey participants used when they abandoned the new account opening process. Fifty-one percent were using a mobile phone when they gave up the process, while 31 percent tried to open a new account via their computer or laptop. Only 16 percent used their tablet during the failed new account process. Therefore, since consumers routinely use mobile phones to open new accounts, financial institutions should make every effort to optimize the experience for mobile phone users.
COVID-19’s Impact on Fraud
While financial institutions must do their best to offer a convenient and secure online experience, they must also contend with changes in the threat landscape triggered by the virus.
For example, since the beginning of 2020, IDology’s systems have recorded a 209 percent increase in elderly age alerts, meaning notifications of potential fraud schemes involving senior citizens.
We’re also seeing marked increases in SIM swapping and porting, which both result in the consumer’s loss of control of their mobile device. And while fraud schemes continue to experience exponential growth, we cannot forget the ever-present threat of large-scale data breaches and the corresponding impact on customer trust.
nCino and IDology: The Best of the Best
As we’ve highlighted, consumers expect a safe, secure, and convenient online experience, especially when it comes to opening an online account. Anything less will result in abandonment by a significant portion of would-be customers.
To emphasize what’s at stake regarding the opening of new online accounts, we estimate that approximately 56 million Americans have had a new account (such as a bank account, credit card, or ecommerce account) opened in the past 12 months without their authorization. Consequently, 77 percent reported that the opening of an unauthorized account would impact their likelihood of doing business with the company that opened the fraudulent account.
To balance the need for security with convenience, financial institutions need access to technology that employs a layered approach to facilitate new account openings. That’s why many financial institutions rely on an orchestrated approach that integrates the appropriate processes and technology to deliver a streamlined account opening process. In fact, in our Seventh Annual Fraud Survey, a staggering 96 percent of those surveyed believe that identity verification could be a strategic differentiator.
IDology partnered with nCino to ensure financial institutions have the modern identity verification and anti-fraud capabilities they need to provide customers with a competitive advantage. By combining a best of breed online account opening solution with best of breed identity proofing and fraud solutions, we help financial institutions onboard more customers, with less friction, while mitigating account takeover and synthetic identities in their online and mobile channels.