By René Hendrikse, MD EMEA & LatAM, Mitek

 

Humans like to stay in their comfort zones, whether it be ordering the same meal at our favourite restaurant or going on holiday to the same city. In 2020, the tables turned once and for all as organisations and the public had to step out of their comfort zone and suddenly everyday norms became a distant memory.

Since the onset of the pandemic, we have become reliant on technology more than ever before. While this presented a challenge across all industries, financial firms and banks were hit particularly hard. To accommodate the shift online, products and services had to be done digitally, which sparked another concern: security. How could they ensure safety and reliability of online transactions?

Even though the number of people using online banking didn’t significantly rise in the UK, the way we used online banking did. Prior to the pandemic, customers used online platforms for day-to-day activities, like checking their account balance and other low-risk activities. It’s a whole different ball game now, as lockdowns forced customers to rely on technology for a wider range of financial transactions, including ones that required higher levels of trust, like loan or mortgage applications and large payments.

Striking a balance

In the UK, bank fraud hit a new record last year with online fraudsters scamming £497m out of consumers. This rise in fraud is one of the reasons why people don’t trust digital transactions. Financial providers and banks need to show they can protect customers from fraud to earn their trust. This means stepping up their security.

To keep fraudsters at bay, a “step up” system of authentication is needed to ensure that higher-value digital transactions such as payments or credit applications are protected. Essentially, the riskier the transaction, the more robust the level of security needed. Banks that can prove they are taking security seriously are seen as competent and capable, deserving of customers’ trust.

For example, while fingerprint or device recognition is suitable for balance checking or moving money between customer’s accounts, facial recognition that confirms a person’s identity is more likely to reassure customers for major payments or opening new accounts. This additional level of protection confirms to customers that their bank is serious about protecting their data and their identity. To take things a step further, behavioural biometrics, which confirm identities by assessing consumer behaviour to create a unique digital fingerprint, could add an additional layer of defence.

The challenge for banks and financial services providers is to strike a balance between ease and security. When making a payment, we want to complete the transaction accurately and quickly. Any extra step in the process isn’t always convenient, but could be perceived as reassuring if banks let customers know how any additional steps protect them. By striking an optimal balance between user convenience and security, customers will be more likely to trust the transaction.

Trust is a process

Unfortunately, digital transaction fraud isn’t the only cybercrime customers are worried about. Customers also want to feel that their personal information is in safe hands. According to Accenture, only 37% of global customers trusted their bank to look after their data in 2020, down from 51% in 2018: a steep decline. Asking for seemingly irrelevant data only makes customers more suspicious. In fact, 52% of U.S. consumers are more willing to trust a company that limits its request only to relevant data, according to .

But for higher-value transactions, banks need to ask for more data from their customers to prevent fraud. Making sure banks are collecting only the necessary data at appropriate touch points is the key to establishing trust.

Central to that goal, banks must explain and be open about how this data is used. This could be through pop-up notifications that appear onscreen but don’t interrupt the payment process, for example. For people who want to know more, additional links in the pop-up can allow them to find out how their data is being used. As a result, customers can feel in control and reassured about how their data is being handled. By deploying this kind of digital toolkit, customers can count on an engaging user experience while also feeling cared for.

Consumers value transparency

It’s not a one-way street when it comes to trust. Consumers value everything else a bank stands for too. According to Braze, 61% of U.K. customers stopped using a brand due to a clash of values. That’s why building trust with customers through strong brand values and consistent transparency with employees, customers, and the public is critical.

It’s about managing expectations. For example, imagine if consumers are being told how long a process will take, only for a bank to take too long? Being open and honest about processes helps to build trust in the brand by showing it can meet its own promises, proving itself reliable. For banks, deploying the right technologies to provide sufficient security and thinking beyond the technology to prioritise customer experience will help to foster strong customer loyalty.

The most important thing banks can do is start with trust – and reinforce it with every transaction and interaction. For an industry that has spent the last decade clawing back its reputation against all the odds, what’s clear is that trust is a process, not an event. To see continued success, banks must continue to build this trust with their customers, so they feel reassured every step of the way.