iovation Survey Finds Digital Nomads and False Declines Don’t Mix

May 10, 2017         By: Mike Dautner

iovation, the leading provider of device-based consumer authentication and fraud prevention solutions, recently released some interesting findings regarding its newest consumer preference report.

The report is called “Combatting False Declines Through Customer Engagement,” and it was conducted in partnership with global research and advisory firm Aite Group. The survey polled approximately 1,100 consumers across four generations to better understand the impact of false declines on the customer experience.

Some of the findings calculated indicate a large contingent of connected consumers are unforgiving of the inconvenience of a false decline, with over 42 percent of respondents reporting that a false decline would motivate them to leave their banking institution altogether.

We found out that false declines occur when a valid transaction by the authorized cardholder is erroneously declined. In fact, in 2016, approximately $264 billion in card transactions were lost due to false declines from suspicion of fraud in 2016 and is projected to grow to $331 billion come 2018.

“False declines have a material impact on an issuer’s business. While lost transaction revenue is painful, damage to the issuer’s relationship with their customer is of far greater concern,” said Michael Thelander, director of authentication products for iovation. “Banking and financial institutions need to balance security levels with user experiences. Consumers are open to a range of authentication methods as long as they are easy-to-use. Dynamic multifactor authentication does just this by balancing security and user experience by adding flexibility to authentication.”

“As the survey indicates, online banking customers growing openness to engagement represents new opportunities for banks as they look to reduce false declines” said Julie Conroy, research director for Aite Group’s Retail Banking & Payments practice and author of the report. “The path to change will happen over time. But, the ubiquity of mobile devices is already driving progress by enabling a variety of new ways to harvest contextual and authenticating data, which informs institutions’ authorization decisions and, ultimately, improves all user experiences.”