If the identity verification process is not up to the mark, two out of five Indians will stop or reduce the use of existing accounts.
Consumers in India have a low tolerance for inefficient digital experiences when opening an account via a mobile app or website, according to a global consumer fraud research report released on August 7 by FICO, a global analytics software leader. According to the study, Indians selecting a new financial account prioritize ease of use above all else.
More than half (58 per cent) expect to answer 10 questions or less or they will abandon a personal bank account application. One in four (26 per cent) will drop out if asked more than five questions. Irrespective of the number of questions asked, one in four Indians will give up on a personal bank application after 10 minutes.
Says Aashish Sharma, APAC segment leader for risk lifecycle and decision management, FICO: “Indian consumers are embracing digital banking, but they demand a seamless and hassle-free account opening experience. Our research indicates that financial institutions need to simplify these processes to retain customers and enhance satisfaction.”
In the previous year, out of 10 Indians, seven people noticed more identity checks when they logged into bank accounts (64 per cent) or made an online purchase (67 per cent).
As a direct response to the major issue of identity theft in the country, Indian banks have increased identity checks. Concerningly, one in ten consumers has either confirmed (13 per cent) or suspects (12 per cent) that their identity has been fraudulently used to open an account.
Even then, anxiety with identity checks has impacted consumer behaviour. According to the FICO survey, two out of five bank customers have either stopped or reduced their use of existing personal bank accounts and credit cards, mentioning the complex and time-consuming nature of these identity verification processes.
For different account opening processes, Indian consumers show varying levels of patience. Owing to complex or time-consuming identity checks, they are more likely to abandon savings account (56 per cent) or personal bank account (53 per cent) applications.
Two in five (40 per cent) have abandoned personal loan applications for the same reason, while only one in three (33 per cent) have been frustrated enough to abandon mortgage applications.
Additionally, only 16 per cent of Indian consumers feel comfortable opening a mortgage account through digital channels, while a significant 34 per cent prefer to apply for personal loans in person at a branch, rather than opting for online alternatives.
Even though a few customers have shown tolerance towards detailed processes for certain financial products that need thorough scrutiny, the survey clearly shows that expectations for ease of use remain high.
“As banks encourage more customers to use digital services by promising faster online loan approvals, they must address and reduce consumer frustration caused by lengthy identity checks," adds Sharma. "Two in five (41 per cent) Indians will not complete a digital mortgage application if it has more than ten questions and nearly half of the personal loan applicants will abandon the process after ten questions.”
When asked about the benefits of opening an account digitally – via the provider’s app or website — ease of use was identified as the top advantage (73 per cent) followed by speed (68 per cent).
In contrast, three in four (75 per cent) Indians believe in-branch applications offer better security, with only three in five (61 per cent) counting security as a benefit of digital account applications.
“Ease of use should not compromise security and anti-fraud measures,” says Sharma. “Consumers want smarter onboarding processes and identity checks, not riskier processes. They value appropriate friction for high-value products and interactions prone to risks. They expect banks to save them time by leveraging technologies like improved identity verification, transaction history analysis, open banking, and government databases.”
The FICO survey was conducted in November 2023 by an independent research company. 1001 Indonesian adults were surveyed, along with approximately 12,000 other consumers in Canada, the U.S., Brazil, Colombia, Mexico, the Philippines, Singapore, Malaysia, India, Thailand, the U.K., and Spain.