A greater reliance on digital financial technology has been caused by the pandemic’s quicker digital transformation. Despite the fact that just 11% of surveyed consumers still use branches as their preferred banking method, 41% of consumers now utilize mobile applications. More than 80% of consumers have a digital connection to their accounts, with 26% doing so using a computer. However, just 7% of people conduct all of their banking online. This is possible because virtually everyone now has access to digital banking, irrespective of the kind of financial institution (FI).
Consumers may access digital banking from a variety of financial institutions (FIs), fintech companies, and neobanks, and even the most local institutions are no longer constrained by geography when it comes to luring and keeping customers. As a result, there are several competitors for every digital banking service. With so many digital options available, the poor usage of firms that solely offer digital services may seem surprising. A closer analysis reveals that consumers’ primary usage of digital-only banking is being restricted by data security concerns, with 47% of respondents considering this to be a deterrent to banking primarily with a digital-only provider.
Advances in Data Security Technology
Digital data security is a legitimate concern for consumers. In 2021, identity fraud surged by 79% while data breaches hit new heights, exposing the personally identifiable information (PII) of roughly 300 million people. 62% of US customers are either very or extremely concerned about the threat that data breaches pose in light of all of this.
Data security technology solutions, however, are developing significantly. Cyberattacks are to blame for 92% of data breaches, and many businesses are using behavioral biometrics to combat this problem. By combining a variety of behavioral factors, businesses may create a behavioral biometric profile that is almost 100% accurate in differentiating fraudsters from legitimate users. While behavioral biometrics can assist improve the accuracy of anti-fraud stacks that include physical biometrics and passwordless authentication, they do not have to be the only measure used to safeguard user data from breaches.
Artificial intelligence (AI) algorithms offer another workable solution for data protection by improving fraud detection. Two of the use cases with the highest investment are the detection of fraud including knowing your customer (KYC) and anti-money laundering (AML). By 2022, it is anticipated that there will be 31% more financial institutions (FIs) utilizing AI to prevent fraud, with 75% of acquiring banks doing so. AI is one of the main technologies used to increase data security without sacrificing user experience, along with machine learning.
