Consumers No Longer Believe Passwords Are The Most Secure Method For Authentication

New research from Experian finds that consumers have more confidence in invisible security

As more consumers engage with businesses digitally to bank, shop or pay, online security remains the top concern. Survey insights from Experian’s annual Global Identity & Fraud Report found that since the pandemic, consumers have an increasing level of comfort and preference for physical and behavior-based – or invisible – methods of security. In fact, for the first time in four years, passwords did not earn a spot in the top three most secure methods for authenticating a customer’s identity.

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Our research showed that the top three most preferred methods for authentication are:

• physical biometrics, such as facial recognition and fingerprints
• pin codes sent to mobile devices
• behavioral analytics, passively observed signals that require no effort from the consumer

“The top three methods consumers prefer actually give people the added security they desire when accessing their accounts,” said Eric Haller, Experian’s EVP and General Manager of Identity, Fraud and DataLabs. “Consumers want to be recognized digitally without extra steps to identify themselves, and they don’t want to remember yet another password. They are open to more practical solutions in today’s digital era.”

The pandemic caused a surge in digital activity, far greater than expected and many believe this trend is not going away. In fact, there has been a 20 percent increase in consumer online transaction activities since the Covid-19 pandemic began. Fraud rates are currently on the rise and consumers are still prioritizing a safe experience, with 55 percent citing security as the most important aspect of their online experience. In addition, 2 out of 3 businesses have increased concern about the overall level of fraud.

“Businesses must be able to properly identify their customers from fraudsters, otherwise they are not only risking financial loss but also customer trust, which is critical for today’s digital consumer. There’s an opportunity for companies to modernize their authentication that doesn’t require heavy customer involvement and doesn’t take away from a seamless digital journey,” added Haller.

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To develop the study, Experian^® surveyed more than 9,000 consumers and more than 2,700 businesses during three waves throughout the pandemic across 10 countries spanning North America, Latin America, Europe and Asia.
Additional findings from this year’s annual fraud report include:

• 34 percent of consumers are worried about online privacy compared to 29 percent pre-pandemic.
• 33 percent of consumers are worried about identity theft compared to 28 percent pre-pandemic.
• 44 percent of consumers are most concerned about protecting credit cards and bank account details while only 23 percent were concerned about protecting personal data such as their date of birth, address and social security numbers.
• 49 percent of consumers under 40 are more concerned about fraud now than before the pandemic, compared to 37 percent of consumers older than 40.
• 48 percent of consumers under 40 feel safer using biometric security features than before the pandemic, compared to 37 percent of consumers older than 40.

Experian’s identity and fraud business comprises more than 300 fraud experts around the world working to protect people’s identities and fight fraud for businesses across multiple sectors, including financial services, telecommunications, retail/e-commerce, insurance, government and healthcare.

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