New data from FICO underlines that banks and lenders need to deliver end-to-end digital on-boarding for the best customer acquisition

HIGHLIGHTS:         

• Independent research commissioned by global analytics software provider FICO reveals that 89 percent of UK citizens would open a financial account online.
  • 83 percent would open a current bank account online.
  • 70 percent would take out a credit card online.
  • 74 percent would open a mobile phone account online.
• Over three-quarters want to prove their identity digitally as part of the on-boarding process – by scanning documents or providing a selfie.
• Only 45 percent will complete the application if offline actions are required; financial institutions that don’t facilitate a completely digital account opening experience could lose up to 55 percent of their new business.

Since the start of the COVID-19 outbreak, much focus and value has been put on contactless and online interactions – particularly in the financial sector. New research commissioned by global analytics software provider FICO, conducted just before the pandemic took hold, shows that online interactions were already very much par for the course amongst UK consumers. The challenge for financial institutions appears to be ensuring that the entire on-boarding process can be completed digitally.

According to the new FICO research, conducted amongst 4,500 consumers globally at the start of 2020, it’s not the millennials but Generation X (35-44-year olds) who are leading the charge in digital account opening. 89 percent of 35-44 year olds would open a bank account online, followed by those aged over 55 (82 percent).  Perhaps surprisingly, 18-24-year-olds are the least likely to open a bank account online, at 79 percent, which may reflect their lack of financial confidence rather than any reticence to engage digitally.

When opening bank accounts digitally people expect to carry out related activity in-channel (if necessary by scanning documents or providing a selfie). 77 percent think they should be able to prove their identity in this way and 73 percent expect to prove where they live without moving offline. Almost half – 46 percent – also expect to be able to set up a biometric such as fingerprint scan at account opening.

Again, it’s those that largely fall into the millennial category who are the least keen to scan identity documents or provide selfies to complete their application.  Only 53 percent would do this to prove where they live, compared to 80 per cent of 35-44 year olds.

Crucially for banks and lenders, if it wasn’t possible to complete all the actions online to open an account, only 45 percent will carry out the necessary offline actions as soon as possible. Nearly a quarter (24 percent) would try another provider and 8 percent would give up opening the account altogether. 17 percent said they would eventually complete the application with the extra steps required – but the question is whether that would actually ever happen. Financial institutions that don’t facilitate a completely digital account opening experience could, therefore, lose up to 55 percent of their new business.

Sarah Rutherford, identity solutions expert, FICO said: “Digital account opening has become the norm even without the acceleration in online adoption prompted by COVID-19. The challenge for banks and lenders is to make the experience entirely digital – and to address any uncertainty or lack of trust amongst some groups.

“In the current climate this is crucial because branch visits are actively being discouraged.  But it’s crucial for the longer-term too. The changing behaviours brought on by COVID-19 will only increase consumer demand for online and frictionless, interactions. The financial sector needs to work hard to meet this challenge to create the best possible customer experience whilst also reassuring those customers who have any doubts about digital security.

“The key is to have continuous authentication methods in place using both biometric and non-biometric methods of ID management and an integrated approach that can be applied across every customer touchpoint.”

FICO has produced infographics for each country surveyed that shows what people think about how identity proofing happens in their country and they can be accessed here. .