1 in 2 Indians reject bank, credit card applications over complex ID checks

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

More than half (58%) Indians would abandon a savings account application if it required answering more than 10 questions, revealed a  recent study by global analytics leader FICO.  The survey, which polled over 1,000 Indian adults, found that ease of use is the top priority for consumers when opening new accounts online. 

While heightened security measures like identity checks are crucial in a nation grappling with identity theft,  the survey highlights a growing frustration with cumbersome verification processes.  Nearly two in five (38%) Indian consumers have either stopped or reduced using existing bank accounts due to lengthy identity checks.

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.

Indian consumers have also shown 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, said Aashish Sharma, APAC segment leader for risk lifecycle and decision management at FICO.

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.

 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.”