Among Rocky’s series of financial services industry thought leadership reports is one about “Mobile Identity”. The report examines the importance of mobile identity and trust among Gen X and Gen Y who together make up half of the global population. Information was analysed from 318 financial services executives across the Asia Pacific region, Europe and the US and 4,272 consumers across seven countries (Australia, Singapore, Indonesia, Malaysia, Hong Kong, UK and the US). The following is a condensed version of the 70 page report.
Importance of Mobile for Financial Services
Mobile devices are becoming the gateway to the financial services world. It is increasingly rare to see a financial institution without a mobile application offering in this age that has moved from digital disruption to digital survival. In the last seven years since the smartphone was introduced, these devices have become the primary means for consumers to access financial services. “Both identities and consumption of financial services are now inextricably fused with our mobile device”.
Top Ten Insights
- Battle to acquire and digitally engage Gen X and Y is on
- “Online pure plays” by UBANK and ING Direct have been relatively outperforming other Australian banks. They are both relatively new to playing field – UBANK was established in 2006 and ING in 1999 with both banks using Everification as part of their account opening process.
- Bendigo Bank and other community institutions (building societies and credit unions) are having a tougher time attracting the younger demographic with the average age for a credit union customer around 51.5 years compared with 42.5 years for banks.
- Digital channels seems to be a necessary precondition to attract Gen-X and Gen-Y customers.
- The basis of identity and security is trust
- Despite customers trusting their financial institutions more than other types (e.g. government, telecommunications service provider, internet retailer), few are very satisfied with their current institution’s security performance.
- Trust comes in multiple forms (e.g. knowing that personal information is kept secure, finances are safe and the institution’s reputation for data security).
- Consumers are more willing to share personal information with financial institutions than other types of institutions
- The extent to which consumers share their personal information seems to increase as their wealth increases.
- 47% of those with a net worth of more than US $1 million would share their DNA profile with a financial provider to ensure security.
- Robust authentication methods improve customer satisfaction
- Only 42% are very satisfied with their financial institution’s authentication methods. Hong Kong had one of the lowest scores with 14% of people being very satisfied.
- America is a clear leader in this area perhaps due to USAA’s* recent deployment of biometrics (facial and voice recognition technology) across its four million mobile banking app membership base.
* USAA is a San Antonio-based financial services company
- Identity theft is impacting Gen X and Y, particularly as their wealth increases and many think it’s the institution’s fault which will inevitably lead to customers defecting
- 40% of people that have experienced identity theft or felt that their identity has been compromised believe that it was the institution’s fault
- Over a third (35%) of consumers with a net worth of more than US $1 million have personally experienced security failings with their financial institution.
- The top consumer concern with identity theft is financial loss, followed by inconvenience of resolving (e.g. setting up new account details & recovering lost funds).
- Passwords are a flawed authentication method – and everyone knows it
- “The whole notion of passwords is based on an oxymoron. The idea is to have a random string that is easy to remember. Unfortunately, if it’s easy to remember, it’s something non-random. And if it’s random, then it’s not easy to remember.” – Bruce Schneirer, Author, 2008
- Almost half (44%) of consumers have a small number of passwords that they use multiple times across their digital identities, and one in five (18 per cent) use just one common password across all digital accounts
- 25% of consumers actually write down their passwords
- The industry still thinks customer prefer passwords but it’s time to look to authentication methods that garner greater trust
- Fingerprint scanning is one such method and is perceived as the strongest method of authentication in Australia, Malaysia and Singapore. On the other hand, the United States and Hong Kong rate eye scanning as the most secure method. Indonesia and the UK believe strongly in facial recognition.
- The financial services industry recognises that it has underinvested in identity and security-related capabilities but this is expected to change
- The dominant view in the industry is that the current investment in identity systems is less than appropriate (62%)
- 87% of respondents anticipate that their institution’s level of planned activity and investment in customer identity will increase
- More secure, mobile-based identity is a key part of solution towards mobile as a primary access device for financial services
- The most important factor when using a smartphone app was the security of access (i.e. only you can access the account). 36% of respondents chose this answer followed by privacy (personal details being protected).
- Mobile authentication methods are highly appealing and can have a very strong business impact including acquisition, retention or defection.
- Gen X and Y are even prepared to pay for this security. An annual fee ranging between US$3 and US$20 (depending on the market) would be acceptable to many.
- Consumers are split between whether they should be paying for the enhanced authentication methods as more than half consider authentication to be the institution’s responsibility.
For the full report – click here