New research on consumer friction and fraud attrition reveals well-intended step-up authentication challenges create friction and dilute consumer relationships. Of those saying performing additional steps had a negative effect on their perception of their bank and that it affected their behavior, 30% changed banks, 26% called customer service to complain and 26% used online/mobile banking less often.
According to the research by ThreatMetrix and First Annapolis, titled, “The Path to Digital Transformation: Controlling Friction While Tackling Cybercrime in Financial Services” one year’s worth of friction and fraud is estimated to cost U.S. banks $14.9 billion in lost relationship value. Consistent levels of friction and fraud over a five-year period would translate into a cumulative $74.3 billion – which does not include the life-time value of their account, future cross-sell potential and referrals.
When it comes to digitally managing financial services, consumers are highly engaged. 70% of respondents reported logging into their bank’s online portal or mobile app at least once per week, and 29% daily.
Security remains a very important concern for consumers, and perceptions of security impact brand advocacy. 62% of respondents noted that they would not recommend a bank to a friend if they experienced any level of fraud on their account.
Consumers view both banks and online retailers/wallet providers as responsible for safeguarding their digital identities and payment information, but they are more likely to hold their bank accountable:
72% of respondents agreed (including 30% who strongly agreed) with the statement “my bank is responsible for monitoring activity on my account and preventing potentially fraudulent transactions.” (7% disagreed).
54% of consumers agreed with the statement “online retailers/wallet providers are responsible for monitoring activity and preventing potentially fraudulent transactions.” (13% disagreed).
For most consumers, security is an important factor when selecting and recommending a bank:
81% of consumers agreed (including 47% who strongly agreed) with the statement “a bank’s reputation for security is an important consideration when choosing a bank”. (4% disagreed).
62% agreed that they “would not recommend a bank to a friend” if they experienced fraud on
their account. (11% disagreed).
The study notes the challenge banks face is preventing fraud and cybercrime while maintaining the quality of their digital experience. As consumers become more digitally engaged, their expectations increase.
With access to unprecedented amounts of information, consumers demand more, better, and faster experiences. Nimble startups and innovative FinTech companies are threatening to erode bank margins, targeting consumers with a variety of alternatives to traditional banking products and services, and leveraging new technology to deliver lower cost services and potentially superior experiences.
In this environment, banks must find ways to provide a streamlined, dynamic, and engaging experience, while at the same time maintaining the stalwart security and trust that is the cornerstone of traditional banking relationships.
<1X/mo 22% 1-2X/wk 20% 3-4X/wk 9% None 9% Daily 7% Source: ThreatMetrix;First Annapolis For a complete archive of more than 60,000 articles published since 1995 search the CardFlash.com library.