UK consumers prefer that banks use biometric data to confirm their identities

Key stat: UK shoppers are demonstrating more awareness of and understanding around identity checks while shopping online this year, as last year they suffered from £15.3 million ($18 million) in losses due to identity fraud during the 2021 holiday season.

The data comes from FICO’s Fraud, Identity, and Digital Banking Consumer Survey, which polled 1,000 UK adults in August 2022.

Additional findings: The survey asked UK consumers about their experiences with identity checks, and why they think identity checks are important.

  • 72% of respondents said they believe the main reason their banks conduct identity checks is to protect their accounts. A much smaller percentage (14%) said they think their banks perform identity checks to eventually upsell them on new products and services.
  • 63% of those surveyed said they saw an increase in the number of identity checks they had to complete while online shopping this year, and 52% saw an increase when logging into their bank accounts.
  • When asked what their primary consideration was when opening a new account, 30% said good fraud protection was No. 1. Seventy percent listed good fraud protection in their top three considerations.
  • 7.7% of respondents reported that their identity has been stolen and used to open a financial account. FICO estimates that percentage to be about 4.1 million people.

Best way to perform an identity check: Performing an identity check can be burdensome and time-consuming, but the survey asked participants about their preferences on how to go about checking identity.

  • A quarter of respondents said they’ve abandoned the account-opening process because the identity check was too difficult or taking too long.
  • 20% said they’ve reduced or stopped using an existing account because completing identity checks was too difficult or time-consuming.
  • The respondents showed a large preference for biometric identity checks, with 65% saying they like using fingerprints.
  • 81% of those who prefer using biometrics for identity checks said their account security is excellent.

Our take: Consumers are increasingly understanding why identity checks are important. That’s a great relief for banks, as customers are likely to be more patient with going through them. Biometric features will ease some of the cumbersome process, and the research from FICO supports findings from other reports.

  • According to a report from PYMNTS and Entersekt, 73% of consumers who access financial accounts via multiple devices are willing to log in with alternative authentication methods.

FICO’s data also aligns with one of our predictions for the banking industry in 2023: We expect data security and protection, including identity protection, will become table stakes for financial service providers. Financial institutions that focus on data privacy now will gain a major competitive advantage with consumers, who will prioritize it when choosing a financial services provider.

This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.