The Trust Gap: Shifts in Consumer Preferences in the Post-Breach Era

With the increase of visible data breaches, privacy failures and new payment related fraud schemes, personal data availability and the anonymity of the internet, consumer perceptions and expectations around trust and identity verification have shifted according to new data from IDology’s Consumer Digital Identity study.

The research, based on a survey of 1,015 online adults representative of the US population, reveals 5 key trends that illustrate how recent breaches and shifting consumer behaviors are impacting the way businesses approach identity verification:

1. Consumers place a premium on security and identity verification.

   Businesses aim to ensure that the account opening experience is both seamless, fast and positive. Up until now, the focus of consumer preferences placed ease and speed over security, but this may have recently shifted. The study found that most important to American consumers during the account opening process is now security (88 percent) followed by ease (72 percent), and speed (62 percent).

   Data breaches and shifting fraud schemes have eroded the trust of American consumers. As a result, the identity verification process, once considered a behind-the-scenes step, is now a front-end consumer consideration and competitive differentiator. Sixty-seven percent of high-income consumers are more likely to choose a financial institution if it uses advanced identity verification methods to keep account origination secure.

2. Removing friction is still vital for the customer experience.

   Even with growing security concerns, consumers still want an efficient and frictionless experience during onboarding and day-to-day transactions. Legitimate customers don’t want to be treated like criminals but need assurance that the process is secure and trustworthy. Introducing the right friction at the right time can address a consumer’s security concerns while too much friction and not enough of a sense of security can result in abandonment or less engagement. One in three has abandoned the process of opening a new account because it was too difficult or took too long.

Consumers have the power of choice and will go elsewhere if they feel a company is not serving them well. As a result, the way businesses authenticate and verify customers has become a competitive advantage.

3. Password practices remain vulnerable.
   

   Despite increasing concerns, many consumers still use vulnerable password practices, heightening the need for businesses to take extra measures and evaluate multiple, diverse identity attributes to safely verify customer identities. When asked how often they change passwords, 76 percent said once a year or less, while one in six admitted they never change their passwords unless forced to do so and 43 percent use passwords that are the same, or have only slight variations, across multiple accounts.

4. Consumers place more responsibility on the companies to secure their data than on they do on themselves.
   

   Every company is now in the identity verification and authentication business. Consumers have high expectations that companies will be able to identify them when they open an account, protect their information when they become a customer and stop bad actors from stealing and/or using their data fraudulently. Despite these high expectations, consumers have relatively low levels of confidence in the ability of the companies they trust with their data to protect it. Fifty-four percent have no or low confidence that businesses can protect their data and 49 percent have no confidence in credit bureaus. Also, consumers place more responsibility with companies than with themselves. Sixty-seven percent of consumers strongly believe that it is a company’s responsibility to protect their personal information compared to 59 percent who strongly believe it was their own responsibility. 

5. Consumers are open to using more secure methods of authentication.
   

   It’s important for companies looking to improve the consumer experience to consider that forty-five percent responded that they are “extremely” or “very” willing to use more secure authentication methods. American consumers trust the added security provided by knowledge-based authentication (KBA) questions, one-time passcodes sent via SMS for two-factor authentication (2FA) and biometrics. These are all methods they already use and know, so it’s not surprising they trust them the most.

When it comes to KBA, not all questions are viewed the same. Overall, 90 percent of consumers are comfortable answering KBA questions to verify their identities but prefer demographic-based questions over credit-based questions two-to-one. This clear preference can be attributed to the data source and how easy it is to recall certain types of information. A dollar amount for a mortgage payment is often more difficult to recall than the name of a street— particularly if the payments are made automatically.

Consumers want to feel secure and expect businesses to protect their information, but they still expect their transactions and onboarding to happen in a fast, convenient and effortless way. Similarly, companies need to approve more legitimate customers and ensure their trust, while defending their systems from fraud.

The way forward is through multi-layered, comprehensive and robust identity verification for account onboarding, identity verification and authentication. A multi-layered approach that validates “under the covers” and applies friction only when needed, can elevate customer trust, facilitate onboarding and engagement, increase business identity assurance and deter fraud.

Christina Luttrell is the senior vice president of Product, Client Solutions and Marketing for IDology, a leader in multi-layered identity verification, authentication and fraud prevention.