Fourthline surveyed 6000 consumers across six European markets (France, Germany, Italy, the Netherlands, Spain, and the UK), asking them about their experiences and attitudes relating to banks, fraud, KYC, and authentication.
If you haven't already, read parts one and two of this report to learn about European customers' attitudes towards digital and traditional banks, fraud – both perceived and experienced – and KYC processes. In this final instalment, we explore authentication and how banks should best approach it.
Authentication: attitudes and preferences
Due to concerns around fraud there is strong support for authentication among consumers in all markets. There is also support for the idea that authentication makes them feel in control of their data security.
Biometric authentication is widely regarded as the most secure method. This is true across all markets, and even more pronounced among customers of digital-only banks (68% compared with 61% of traditional banks), younger people (71% of 18–34-year-olds, compared with 59% of those aged 55 and over), and those who trust banks (67% compared with 58% of those who say they distrust banks).
PIN, password, and security questions are viewed as less secure across all markets. For instance, just 36% of people in Italy think security questions are secure, and 40% of people in France feel the same way about PIN. If we accept that younger people and customers of digital-only banks represent the trend for consumers as a whole, then we can see the market is steadily moving in favour of biometrics as the preferred method of authentication.
However, despite widespread belief that authentication processes are easy and that biometric authentication is the most secure option, many consumers would prefer to choose which method to use.
86%
agree that they understand why the authentication methods used by their bank are necessary, and only 4% disagree78%
would like to be able to choose which authentication method they use, while only 6% wouldn’t65%
say biometric authentication is the most secure method, a figure that rises to 76% in the UK73%
say authentication makes them feel in control of their data security, while only 7% disagree78%
say their bank’s authentication process is easy to use59%
of respondents don’t think biometric authentication is safe because they think it’s easy to fake, and a further 50% worry their biometric data might be stolenHow to approach authentication
Banks need to choose authentication methods that balance security and usability. Not only is this a challenge, but the definition of what is secure can change as new threats emerge.
Multi-factor authentication with a biometric security process is the best approach. However, it remains important for banks to keep a close eye on security protocols and be prepared to adapt in response to new threats. Furthermore, as many consumers have expressed a desire to choose the authentication method they use, providing them with some carefully selected options to tailor their flow can help improve the experience without compromising security.
Not all authentication tools need to be built and managed in-house. In fact, there is a strong case to be made for partnering with proven third-party solutions. These tend to provide superior user experiences and solve edge cases better than in-house solutions can, as they must adapt to emerging fraud trends and solve the same authentication challenges at scale across a wider range of use cases than any single bank. They are also often more cost-effective since no valuable in-house resources are required to build and maintain the solution.
“Fraud is an ongoing game of cat and mouse, where fraudsters have the advantage since they are always able to pick up new technologies and experiment with them immediately without regard for laws or ethics. Banks have a wide range of challenges to think about, so solutions that are laser-focused on solving specific challenges around authentication can help banks stay ahead of emerging fraud threats.” Ralph Post, CTO of Fourthline
How banks should communicate their approach to KYC
Beyond having an effective approach to KYC and fraud management, communicating this approach to customers is key. Most respondents (67%) want to know if their bank outsources fraud or security processes and if they do, to which providers. A similar percentage (66%) would like to know more about how their bank keeps their data safe. However, just over half (55%) say their bank communicates clearly about how they protect their data. An effective communication strategy helps put customers’ minds at ease and can help a bank differentiate itself from competitors.
55%
would like to receive written documentation about security. 28%
would like to receive information about security over the phone45%
would like to watch videos about security59% of people aged 55 and over prefer written documentation, as do German consumers (65%), while 50% of people aged 35–54 prefer video. The best approach for banks is to understand the preferences of their customers and use a tailored combination of channels to communicate their approach.
Survey data collected by Fourthline in November, 2024.
