The pandemic’s faster digital shift has driven a higher dependence on digital financial technologies. While 48% of surveyed consumers still use branches, just 11% use them as their primary banking method, compared to 41% who use mobile applications. More than 80% of users link to their accounts digitally, with 26% accessing their accounts via computer. At the same time, just 7% of consumers bank exclusively online. This is feasible because, regardless of the kind of financial institution, digital banking access has become practically universal (FI).
Consumers may access digital banking from a wide range of FIs, FinTechs, and neobanks, with even the most local institutions no longer limited by location when it comes to attracting and maintaining clients. As a result, all digital banking services compete against an almost endless array of rivals. With so many digital choices to pick from, the low utilization of digital-only organizations may look unexpected. However, a closer look finds that data security concerns are limiting customers’ primary use of digital-only banking, with 47% seeing this aspect as a disincentive to banking primarily with a digital-only provider.
Data Security Technology Advances
Consumers’ fears about the security of digital data are well-founded. In 2021, data breaches reached new levels, exposing the personally identifiable information (PII) of about 300 million people, while identity fraud increased by 79%. With all of this going on, 62% of US customers are either very or extremely concerned about the threat that data breaches offer.
However, technical solutions for data security are making significant progress. In all, 92% of data breaches are the result of cyberattacks, and numerous firms are tackling this issue with behavioral biometrics. Companies may construct a behavioral biometric profile that is nearly 100% accurate in identifying fraudsters from real users by integrating numerous behavioral traits. At the same time, behavioral biometrics do not have to be the only component protecting user data from breaches, but they may help increase the accuracy of anti-fraud stacks that incorporate physical biometrics and passwordless authentication.
By boosting fraud detection, artificial intelligence (AI) algorithms provide another viable answer for data protection. Anti-money laundering (AML) and know your customer (KYC) fraud detection are two of the most heavily invested in use cases. The number of FIs using AI for fraud detection is expected to increase from 10% to 31% by 2022, with 75% of acquiring banks using AI to detect card transaction fraud. Along with ML, AI is one of the primary technologies used to improve data security without compromising user experience.
