New insight suggests consumers are getting more savvy when it comes to the checks made by lenders — but can still be frustrated by delays

Highlights

• 63% reported an increase in identity checks
• 72% know their banks verify identities to protect accounts
• 25% have abandoned opening an account because identity checks were too difficult or time-consuming
• 48% said fingerprint scans were an excellent way to verify an online payment when buying online

There was a reported £15.3 million lost to fraud in the UK between November 2021 and January 2022, and with just a few days until Christmas Day, panic mode could be setting in this year. The good news is that it appears UK shoppers recognize the importance of increased fraud checks by lenders and banks. Global analytics software company FICO has revealed the findings from its latest surveyi with consumers showing an increased understanding of how and why fraud checks need to happen. Shoppers are also embracing biometrics to add layers of protection to their accounts.

UK consumers have noticed an increased level of checks when carrying out transactions or logging into their account. Some 63 percent reported an increase in identity checks when purchasing online with a card and 52 percent saw a rise in the number of checks carried out when logging into their bank accounts.

Consumers do trust their providers are confirming their identities for the right reasons. 72 percent understand it’s to protect them from fraud. And 57 percent recognize the role identity verification plays in preventing money laundering.

The other important change identified by the FICO research is consumer acceptance of biometrics for authentication. When asked about making a payment online with a debit or credit card, 48 percent selected fingerprint scans as an excellent way to secure an account. Another biometric data set – face scan – was the top choice to access an account securely for 45 percent of respondents.

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“It’s also good to see that as new security methods become available, shoppers are embracing them. This is an essential part of the process. Any new anti-fraud tool will prove ineffective until consumers get on board with it.”

The appetite for receiving one-time passcodes to verify online payments has also shifted as digital engagement through banking apps has increased. FICO’s survey in 2020 found that only 14 percent wanted to receive notification of a passcode to their mobile banking app. That has increased to 36 percent in the 2022 survey.

“As spending rises in the build-up to Christmas, it triggers a spate of scams shoppers must navigate to protect their finances,” said Matt Cox, vice president and managing director for FICO in EMEA. “It is good to see that consumers are taking note of the different types of fraud they may face and understand why banks need to carry out various identity checks while they make purchases.

“It’s also good to see that as new security methods become available, shoppers are embracing them. This is an essential part of the process. Any new anti-fraud tool will prove ineffective until consumers get on board with it.”

Getting the balance right

While the FICO survey suggests understanding of identity checks is increasing, there is, however, still some negative experience of verification checks that needs to be addressed by financial account providers. Consumers aren’t tolerant if their experience is poor.

One in four respondents said they had stopped opening a new personal account as the identity checks were too difficult or time-consuming. Similarly, 20 percent said they had abandoned opening a savings account as the checks were too long and difficult.

“Having the right level of checks in place to secure accounts but also to keep the customer happy is a real balancing act,” Matt Cox added. “Tip the scale too far in either direction and the whole system falls apart.

“Banks must understand that there is no solution that will make every single customer happy. A laborious process to one consumer might be seen as simple for another. Financial institutions need to be flexible in how they check customers’ identities. Each customer and situation is unique and catering for that requires sophisticated orchestration of how identity is checked.”

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