Computer-ji, you are asking too many questions: 1 of 4 applicants abandon digital bank a/c applications, shows survey

The consumers in India have a low tolerance for inefficient digital experiences when opening a bank account via mobile application or bank website.

Banks are increasingly going digital and nudging customers to open accounts or apply for loans online. But the account opening process isn’t as quick as you would think, a survey by global analytics firm FICO (Fair Isaac Corporation) shows.

In India, more than half of the consumers (53 percent) shun opening a personal bank account, if identity checks are too choppy.

Consumers in India have a low tolerance for inefficient digital experiences while opening a bank account through mobile applications or bank websites.

This was highlighted in FICO's latest report, Consumer Survey 2023. It surveyed 6,000 adults from India, Philippines, Malaysia, Thailand, Singapore, and Indonesia in November 2023.

According to the survey, more than half (58 percent) of Indian respondents said they prefer to answer fewer (less than 10 preferably) questions when opening a bank account online. Else, they walk away.

Regardless of the number of questions asked, one in four customers gives up on a personal bank account application, if the application process exceeds 10 minutes.

“Indian consumers are clearly embracing digital banking, but they demand a seamless and hassle-free account opening experience,” said Aashish Sharma, APAC segment leader for risk lifecycle and decision management at FICO.

"Our research indicates that financial institutions need to simplify these processes to retain customers and enhance their satisfaction," he added.

In the last one year, nearly 7 out of 10 Indians have noticed more identity checks when they log into bank accounts (64 percent through internet banking) or make an online purchase (67 percent), according to the report. “This has gone up due to identify thefts,” said Sharma.

Nearly 13 percent of the customers have either confirmed or 12 percent suspected that their identity has been fraudulently used to open an account.

Despite this, the identity checking process can be frustrating, the report points out.

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Forty percent of the respondents said that they have abandoned online personal loan applications because of the longer duration it takes to process applications.

In the survey, 33 percent of the respondents mentioned that they were frustrated enough to abandon online mortgage applications.

According to the report, only 16 percent of Indian customers feel comfortable while opening a mortgage account through digital channels, while a significant 34 percent prefer to apply for personal loans in person at a branch, rather than through online alternatives.

While some consumers are more tolerant of the detailed processes for certain financial products that require a thorough scrutiny, the survey clearly shows that ease-of-use expectations 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," added Sharma.

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Now, banks verify the identity of customers through multiple ways, and new methods frequently appear.

According to the report, in India, 55 respondents considered fingerprint scans the most secure. Passcodes sent via a third-party messaging app are viewed as the least secure method (see graphic).

A few years ago, biometrics were an unknown verification method. But today, it’s a preferred authentication method. For instance, the National Payments Corporation of India (NPCI) is in discussions with a few startups to enable biometric authentication for the popular mobile-based UPI payments, according to a couple of sources Moneycontrol spoke to.

UPI uses a personal identification number (PIN) as the second-factor authentication - similar to OTP (one-time password) for card payments - for mobile payments as of now.

To be sure, enabling biometrics would mean that consumers will use their fingerprint on the Android platform and face ID on iPhones for UPI transactions, instead of a four or six-digit UPI PIN.

There is an urgency for alternative payment authentication from the Reserve Bank of India (RBI) because of the multiple UPI scams that keep happening because of PIN-related frauds.

Last week, the RBI published a framework for alternative payment authentication, other than OTP, for card transactions. The regulator prefers behavioural risk patterns and biometrics over other means, as of now.

People are most worried about being tricked into sending money to an imposter.

This type of fraud tops the list of fears of respondents. Nearly 26 percent of respondents are also worried about fraudsters forging genuine people’s identities to open an account. (see graphic).