As banking institutions of all sizes seek to maximize their digital channels, there emerges a growing tension between the need to prevent fraud and the desire to maintain a frictionless customer experience. This is a key dilemma contained within the report “Banking in the Balance: Security vs. Convenience.” The report has been written by IBM’s Valerie Bradford, and it is hosted by Data Breach Today.
In determining how to provide a good (and competitive) customer experience without compromising security, authentication and trust, banks need to consider three aspects. First is to acknowledge the fundamental tension between security and convenience. The second is to understand the risk with both fraud and customer retention. The third area is the necessity of exploring new ways to transparently assess digital identities.
In addressing the first, Bradford acknowledges that “customers want to log in; they want to initiate transactions, even create new accounts with a really user-friendly experience.” This expectation is high, especially among millennials who are increasingly used to multi-channel baking experiences. For instance. a separate survey determined that the majority of millennials said that an easy-to-use smartphone app determined which bank they were most likely to go with.
Bradford notes that a great customer experience does not fit easily with cybersecurity: “with all these new digital innovations they have to build out, they also have to give security just as much thought. And that leaves some real tension.” This means, she states, banks need to resolve the conundrum: “How do you balance that great customer experience without compromising on security, authentication and trust?”
With the second area, the risk with both fraud and customer retention, to be successful a modern bank needs to allow its customers to interact through “their computers, their tablets and their mobile devices any time and anywhere.” Simply put, “if you can’t provide that digital experience in a secure and seamless way, you’re at risk of falling behind.” In doing so, fraud needs to be at the center of a bank’s strategy. Here she advises “no matter how exciting or customer-centric you can make the user experience, you have to have complete security.”
An ideal balance
For the third and final area, Bradford says that security measures must not come across as overly draconian, otherwise this will put off “real customers by making it harder to open an account or to log in or complete a transaction. Customers are likely leaving to find an institution.”
The issue of security versus customer experience is a complex one, but one necessary for banks to resolve if they are to attract new customers and to protect these customers and the overall assets of the bank.
Digital channels appeal foremost to millennials. This is tendency, and the need for banks to respond, is featured in the Digital Journal article “Why millennials are rewriting the banking rule book.”