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COVID-19 has had a huge impact on consumer purchasing habits, creating new behaviours that are very likely to remain post-pandemic. The global health crisis has fundamentally changed the ways in which we interact on many levels, and especially how we transact. Banking and COVID-19, a recipe for change.
Prior to the pandemic, UK banks were experiencing a steady decline in footfall to branches across the UK. Between 2012 and 2019, the total number of bank and building society branches fell by 22%. It’s clear that social distancing and government-mandated closures have accelerated this trend. Banking is being driven online.
Consequently, banks have been forced to address how to securely allow customers to conduct the same kinds of activities remotely while keeping them safe from increasing digital fraud and cybersecurity threats. And this in an environment where the annual value of online banking fraud losses was estimated at over £110 million in 2019.
In the context of banking and COVID-19, it is imperative that the banking community ensures that it’s fraud detection measures are secure but also streamlined and not detrimental to user experience.
The balance between security and user experience
Accounts less than 24 hours old make up 48% of all fraud value, according to recent data from RSA. In addition, Experian’s 2020 Global Identity and Fraud Report shows us that 57% of contributing businesses report that account opening and account takeover show the highest propensity for fraudulent activity.
Protecting and supporting customers during the account onboarding stage is critical, and businesses must find secure ways to verify the true identity of their potential customers to ensure they are who they claim to be.
Prioritizing fraud detection during a customer transaction tends to result in slower onboarding completion. The friction and poor user experience that this creates is proven to lead to greatly increased abandonment rates as users find the onboarding process too complex or time consuming. Many customers do not return.
It’s critical that banks find the optimal balance between quick and secure onboarding of legitimate customers without creating these drop-outs.
Time to take action
More than ever now is the time for the banking community to look seriously at the methods at their disposal for addressing and overcoming digital fraud, driven as a result of opportunist fraudsters taking advantage of an extreme global shift to digital.
Although the past few years has seen digital account opening at the top of the list of technologies banks intend to add or replace, the current crisis highlights the need for digital transformation, and the need for speed.
Now is the time for challenger and traditional banks to invest in the user experience and digital processes from initial account creation to account management to transaction processing, building in methods to enable secure and fast verification of customers to ensure safe onboarding of legitimate users, prevention of fraudulent activity and maintenance of great customer UX.
To learn more about how we work, or to discuss the Sekura approach with any of our team, Contact Us.