%201.webp)
Entersekt has released survey data showing that 43.2% of consumers would consider switching financial institutions based on authentication methods alone. The findings come from its State of Digital Banking Security report, based on responses from more than 400 people in the United States.
The survey highlights tension between the fraud controls used by banks and credit unions and the methods consumers say they trust. It suggests authentication choices are becoming both a commercial and security issue for financial institutions.
More than 90% of respondents said fraud prevention is a leading factor when choosing a financial institution. Yet 41.1% said their bank's authentication method was to blame for their fraud experience.
The data also shows a gap between common practice and consumer perceptions of security. While 46.7% of respondents said their financial institution still uses one-time passcodes, only 18.2% said those codes were the most secure verification method.
At the same time, 60% said they trust their bank to choose the most secure identity authentication method. That suggests customers are willing to defer to institutions on security decisions, but only up to a point.
Control and trust
Respondents said they want a more active role when suspicious activity is flagged. Although 82.5% said they trust financial institutions to identify suspicious transactions accurately, 27.6% said they want to define which types of transactions require their approval, and 24.1% said they want to choose how they verify their identity.
The results suggest customers will accept some friction if it is tied to fraud prevention and they retain some control over the process. That could present a challenge for smaller and regional financial institutions that still rely on older verification tools.
The study covered customers whose main banking relationship is with community or local banks, credit unions, and regional banks. It focused on views of digital banking, fraud prevention, and the authentication services those institutions provide.
Industry researchers said the findings reflect the pressure on financial institutions as they try to balance security with convenience.
"The authentication landscape must balance complex security requirements, evolving fraud threats and growing user experience expectations," said Trace Fooshée, Strategic Advisor for Datos Insights. "The FIs that prioritize identifying where the line of acceptable friction is for consumers will improve the authentication experience while enhancing security."
Authentication gap
For Entersekt, the results support the argument that outdated security approaches may now carry a commercial cost. If customers are prepared to move their accounts over verification practices, authentication stops being a back-office issue and becomes part of competitive positioning.
Dewald Nolte, Chief Strategy Officer at Entersekt, said the market had reached an inflexion point.
"We are at a critical tipping point in the financial services industry. Fraud attempts are inevitable, making best-of-breed security more than just a defensive measure, but a powerful market differentiator," he said. "As fraud evolves, financial security prevention must prioritize authentication efficiency to maintain customer trust and secure consumer loyalty. The findings in this report clearly show that consumers are educated on authentication methods and will reject the friction of those that are overutilized, like OTP, actively seeking institutions that prioritize modern security."
The broader backdrop is a rise in fraud losses across financial services, increasing pressure on banks to show their controls work without creating unnecessary barriers for customers. In that setting, the survey indicates consumers are not simply asking for less friction; they are judging whether the friction they face feels justified and effective.
Entersekt says it serves financial institutions in 70 countries and processes more than 7.5 billion transactions for more than 250 million cardholders and more than 450,000 merchants through nearly 900 banks.