FIs, Businesses Need to Offer Stronger ID Verification
“We’ve reached a turning point in how consumers view and value identity verification."
Those are among the revelations from Atlanta-based IDology Consumer Digital Identity Study on the effect of major data breaches and related headlines on consumer perceptions and preferences.
Following some record-setting identity data breaches in 2017 and 2018, the study’s findings demonstrate the need for financial institutions and businesses to comprehend shifting consumer behaviors, changes in cybercrime, and the need for stronger, yet frictionless identity verification to enable the overall growth of digital business.
“We’ve reached a turning point in how consumers view and value identity verification,” John Dancu, CEO at IDology, said. “With consumer demand for smooth and secure interactions, and the high expectation for businesses to protect consumer identities, the way businesses authenticate and verify customers has become a true competitive differentiator.”
Other key consumer behavior trends and other major findings identified in the IDology study include:
- Fraud concerns affect consumer choices online, with 83% surveyed having extreme to moderate concern about the fraudulently use of their identities to open accounts.
- Consumers view biometrics, knowledge-based authentication and one-time passcodes as the most secure methods of authentication. Overall, 90% of consumers are comfortable answering knowledge-based authentication questions to verify their identities but prefer demographic-based questions over credit-based questions two to one.
- When opening an account online, consumers place a premium on security (88%) and ease (72%), with 31% reporting they have abandoned signing up because it was too difficult or took too long. This reveals more than ever, consumers look to do business with financial institutions and companies that have minimal friction as part of their overall service experience, along with assurance that their transactions and identities are secure.
The IDology study also revealed that despite increasing concerns, many consumers still use vulnerable password practices. Forty-five percent of those surveyed write passwords down while 73% seldom change them, heightening the need for organizations to take extra measures and evaluate multiple and diverse consumer attributes to safely verify customer identities. Most concerning, 43% of American adults use passwords that are the same, or have only slight variations, across multiple accounts, the report revealed. “This is dangerous—once a criminal gets a password from a data breach, they use those credentials to gain access to financial accounts.”
The good news is that many consumers are open to using more secure authentication methods for online accounts. Forty-five percent are extremely or very willing, with 92% saying they have some willingness to do so.
The study also discovered that many consumers place a higher responsibility to protect their identities on companies than on themselves, while still expecting a seamless experience. Sixty-seven percent strongly agree that it is a company’s responsibility to protect consumer data, compared to 59% who strongly agree that it is a consumer’s personal responsibility.
Further, the gap between consumer expectation and perception is prevalent, with half of the respondents being somewhat or not at all confident that businesses and government agencies can protect consumer identities. In fact, 56% of respondents said they would be more likely to choose a financial institution if it used highly advanced identity verification methods to keep account origination secure.
From the report: “The threat of data breaches and the prevalence of fraud has shaken American consumers’ trust. They still want (and expect) a smooth, fast experience, but they also need to know the company they are doing business with takes security seriously. The result is that the identity verification process, once considered a behind-the-scenes step, is now a front-end consumer.”