Half of Indians reject bank, credit card applications due to complex ID checks, study shows

By Puja Sharma

In a digital-first world, identity verification must not hinder new business

• Ease of use is the top priority for Indians, followed by fraud protection and then value 
• Three in five consumers expect to answer 10 questions or less or they will abandon a savings account application
• Identity checks are on the rise but two in five Indians will stop or reduce the use of existing accounts if the identity verification experience is poor

Global analytics software firm FICO  unveiled its latest global consumer fraud research report, highlighting that consumers in India have a low tolerance for inefficient digital experiences when opening an account via mobile app or website. According to the study, Indians selecting a new financial account prioritise ease of use above all else.

More than half (58%) expect to answer 10 questions or less or they will abandon a personal bank account application. One in four (26%) will drop out if asked more than five questions.

Regardless of the number of questions asked, one in four Indians will give up on a personal bank account application after 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 satisfaction.”

Friction Frustration Exceeds Fraud Worries

• In the past year, nearly seven in ten Indians have noticed more identity checks when they log in to bank accounts (64%) or make an online purchase (67%).
• This increase in identity checks by Indian banks is a direct response to the significant issue of identity theft in the country. Alarmingly, one in ten consumers has either confirmed (13%) or suspects (12%) that their identity has been fraudulently used to open an account.
• Despite this, frustration with identity checks alter consumer behaviour. The FICO survey revealed that two in five bank customers have either stopped or reduced their use of existing personal bank accounts and credit cards, citing the cumbersome and time-consuming nature of these identity verification processes.

Mortgages and Loans Application Process Deserve More Scrutiny

• Indian consumers show varying levels of patience for different account opening processes. They are most likely to abandon savings account (56%) or personal bank account (53%) applications due to complex or time-consuming identity checks.
• Two in five (40%) have abandoned personal loan applications for the same reason, while only one in three (33%) have been frustrated enough to abandon mortgage applications.
• Additionally, only 16% of Indian consumers feel comfortable opening a mortgage account through digital channels, while a significant 34% prefer to apply for personal loans in-person at a branch, rather than opting for online alternatives.

While some consumers are more tolerant of detailed processes for certain financial products that require thorough scrutiny, the survey clearly shows that expectations for ease of use 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. “Two in five (41%) Indians will not complete a digital mortgage application if it has more than ten questions, and nearly half of personal loan applicants will abandon the process after ten questions.”

Appreciation for Digital Application Advantages

• When asked about the benefits of opening an account digitally – via the provider’s app or website — ease of use was identified as the top advantage (73%) followed by speed (68%).
• In contrast, three in four (75%) Indians believe in-branch applications offer better security, with only three in five (61%) counting security as a benefit of digital account applications.

“Ease of use should not compromise security and anti-fraud measures,” noted Sharma. “Consumers want smarter onboarding processes and identity checks, not riskier processes. They value appropriate friction for high-value products and interactions prone to risks. They expect banks to save them time by leveraging technologies like improved identity verification, transaction history analysis, open banking and government databases.”

The survey was conducted in November 2023 by an independent research company adhering to research industry standards. 1,001Indonesian adults were surveyed, along with approximately 12,000 other consumers in Canada, U.S., Brazil, Colombia, Mexico, The Philippines, Singapore, Malaysia, India, Thailand, U.K. and Spain.