43% of Consumers Would Switch Banks Over Poor Authentication Methods, Entersekt Report Finds

Entersekt has released new research revealing a significant shift in consumer loyalty driven by digital security standards. With 43.2% of U.S. banking customers willing to switch institutions based on authentication methods alone, fintech leaders must now view fraud prevention not just as a back-office necessity, but as a primary tool for customer retention.

What was announced

Entersekt published its "State of Digital Banking Security" report, drawing on data from over 400 U.S.-based respondents. The study specifically targeted customers of community banks, local banks, credit unions, and regional banks to gauge their perspectives on the authentication services provided by their primary financial institutions. The findings highlight a growing tension between consumer expectations and the legacy security measures currently deployed by many mid-tier and local lenders.

The report underscores the financial stakes of this disconnect, noting that consumers lost more than $12.5 billion to fraudulent activity in 2024. While 90% of respondents identified fraud prevention as a top factor when selecting a bank, 41.1% explicitly blamed their institution's specific authentication methods for their experiences with fraud. A major point of contention is the continued reliance on one-time passcodes (OTP). Although 46.7% of respondents reported their banks still use OTPs, only 18.2% believe they are the most secure method available.

Furthermore, the data suggests consumers are seeking "strategic friction." Rather than wanting security to be invisible, 82.5% of respondents trust their institutions to identify suspicious activity, but 27.6% want the power to define which transaction types trigger an approval request. Additionally, 24.1% of those surveyed want the autonomy to choose which specific methods they use to verify their identity during a transaction.

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