Eighty-seven percent of financial services respondents to IDology’s Fifth Annual Fraud Report plan to invest more in mobile this year. It’s no surprise given that consumers today regularly use their smartphones to check their balances and open new accounts. So, is it really possible that mobile banking growth has “hit a ceiling?” According to a recent article in American Banker, it is.
With consumer preference for mobile convenience and more banks focused on the mobile channel, why the decline in growth?
The three largest US banks have seen a decline in mobile banking growth since 2012. The American Banker article suggests it’s driven by consumer fears: “Fear of technology, fear of banks, fear of loss of privacy, fear of complexity and even fear of revealing one’s technological ignorance.” Some of that fear probably stems from recent, high-profile data breaches, too.
Financial services organizations, however, have their own fears about mobile banking. Data from the Fraud Report shows that the financial industry is worried about keeping pace with fraud tactics that frequently change and continue to grow in sophistication. Respondents shared that they feel least prepared to handle first-party fraud and synthetic identity fraud, with 58 percent reporting that they are “extremely worried” or “very worried” about these tactics.
What’s important to remember is that the vast majority of transactions that occur each day aren’t attempted fraud—they’re conducted by legitimate customers. Fraud prevention is critical, but customer experience is paramount. The two can’t be viewed as separate silos, yet balancing customer experience with fraud prevention is a difficult task for most organizations.
Many financial institutions rely on legacy identity verification and authentication processes that are optimized for desktop (such as one-time passcodes) or in-branch experiences. For mobile users, these processes can be inconvenient, require too many steps, and work against a positive customer experience, resulting in abandonment and attrition. Meanwhile, doing too little to protect accounts on mobile devices increases risk.
The solution? The American Banker article suggests that the key for getting back to double-digit mobile banking growth is for banks to tap into the segment of smartphone owners who’ve never conducted a mobile transaction. While this could be helpful, the same conundrum still exists. Balancing security with a positive customer experience requires an identity verification solution that can tap into mobile network operator data to authenticate customers invisibly and behind the scenes. With access to mobile identity attributes, such as lost/stolen status and recent account changes, it’s easier to pinpoint potentially fraudulent activity without slowing down legitimate customers.
Mobile shouldn’t have to equate to fear. With the right identity verification solutions and processes in place, mobile transactions can result in a better customer experience, increased revenue, and peace of mind.