2022 FINTECH REPORTWin more customers and theirtrust with identity verification
The Fintech Effect 2022 for risk teams

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Overview// 2At 80% adoption in 2022, fintech is mainstream in the US and consumers are
increasingly clear about what they want out of their experience. Consumers rank

convenience (54%) and security (38%) as the top two factors impacting their decision toadopt a new fintech app, but these priorities can be difficult to balance. The good news
is that 70% of consumers feel more secure when a fintech app asks them to verify their2022 | WIN M O RE CUSTO M ERS A N D THEIR TRUST WITH IDEN TIT Y VERIFICATIO Nidentity. Organizations can prevent fraud and win more customers by implementing highfidelity identity verification measures while maintaining a smooth onboarding process.
The following insights are curated from Plaid’s third annual Fintech Effect report, which
examines consumer attitudes about and usage of fintech. The report is based on datacollected by The Harris Poll between June and July of 2022 from 2,000 participants inthe US across a range of demographics.Overview// 3

The report’s key findings include:•Consumers want convenience, security, and trust: 73% of consumers agree thatthe ease of a sign-up process impacts their willingness to choose a fintech app, and70% feel more secure using apps that ask for identifying information. Additionally,
consumers demonstrate a strong desire to trust the apps they use, with control,

2022 | WIN M O RE CUSTO M ERS A N D THEIR TRUST WITH IDEN TIT Y VERIFICATIO N

transparency, and engagement determining their level of trust.
•Identity verification as a competitive advantage: Consumers feel more securewith apps that verify their identity and 80% prefer them over apps that don’t. Even if
organizations do not need to comply with know your customer (KYC) and anti-money
laundering (AML) requirements, they can attract more customers and deepen trustwith them by strengthening their anti-fraud practices. That said, businesses will
have to balance these security measures with a smooth onboarding process tomeet consumer expectations.

Consumers want convenience, security, and trust

Key takeaways• Efficient onboarding is criticalto the user experience• Consumers understand theimportance of preventing
identity fraud

2022 | WIN M O RE CUSTO M ERS A N D THEIR TRUST WITH IDEN TIT Y VERIFICATIO N• Businesses should prioritize// 4Consumers want convenience, security, and trustW

hen asked what has the greatest impact on their decision to choose new fintech
tools, consumers’ top factors were convenience (54%) and security/privacy (38%).

Consumers also demonstrate a strong desire to trust the fintech tools they use. Altogether,
these expectations show that businesses must balance consumers’ short-term desires withbuilding long-term goodwill.

building trust with consumers
over time

Convenience: onboarding makes or breaks user experience
The onboarding experience is highly impactful for digital finance apps. An easy sign-up
process impacts whether or not 73% of consumers sign up for an app and another 76% aremore likely to sign up for apps they can access instantly. A complex onboarding setup canalso create a drop-off in completed sign-ups — 58% of consumers have abandoned a signup process that was too complicated.

Between consumers’ high expectations and the potential for drop-offs in signups,
businesses should pay special attention to perfecting the onboarding experience.

Consumers want convenience, security, and trust76%// 5Security: identity verification can prevent fraud and win customers
Fraud is a major concern for consumers, and identity verification measures can boostof Americans say they’re much more
likely to use an app when they cansign up and access it instantly

their confidence in the security of an app. Seventy percent of consumers feel safer using
a digital finance product when they need to provide a driver’s license or other identifying
information. This feeling also inspires action: 80% of consumers prefer applications that2022 | WIN M O RE CUSTO M ERS A N D THEIR TRUST WITH IDEN TIT Y VERIFICATIO N

verify their users and their identities over ones that don’t.

As much as efficiency matters in onboarding, consumers understand the importance

73%of protecting their identity. Fraud prevention should be an important considerationin onboarding.
79% MILLEN NIA LSof Americans say easy sign-up

impacts whether or not they use
an appDeepening trust through control, transparency, and engagement
Consumers also demonstrate a desire for trust in their fintech app experience.
Businesses can foster trust by promoting:•58%of Americans say they’ve given up
on signing up for an app because thesign-up process was too complicatedControl: 83% of consumers prefer direct control over where their data is shared, as
opposed to giving that power to a company.

•Transparency: 76% of consumers have more trust in financial companies when theyclearly provide their privacy practices.

•Engagement: 76% of consumers say that the more they use digital tools to manage
money, the more they trust them.

Consumers want convenience, security, and trust

76%

Like preventing fraud, building trust with consumers is a longer-term goal that businesses
must foster over time.

of Americans say they
have more trust in

financial companies when
they clearly convey theirprivacy practices// 6

Overall, consumer expectations emphasize the importance of a secure and efficient
B OTH BA N KS
A N D FIN TEC HS

onboarding experience. While more immediate needs like accessing apps quickly matter toconsumers, longer-term benefits like preventing identity fraud and building trust are just as

2022 | WIN M O RE CUSTO M ERS A N D THEIR TRUST WITH IDEN TIT Y VERIFICATIO N

critical. Fostering convenience, security, and trust can not only attract more users but also
create a more engaged customer base.

Identity verification as a competitive advantage

Key takeaways• Identity fraud is costlyand on the rise
• Consumers are willing to takerobust identity verification// 7

Identity verification as a competitive advantageIdentity fraud is on the rise: in 2021, the number of consumers who experienced itrose 64% year over year. It’s also costly — accounting for $24 billion in losses in theUS in 2021.

measures to prevent fraud• Smooth, secure onboarding
2022 | WIN M O RE CUSTO M ERS A N D THEIR TRUST WITH IDEN TIT Y VERIFICATIO N

can help companies win
customers

Fortunately, consumers are willing to do more to protect their identities. Sixty-five percentof consumers are willing to take a selfie and/or picture of their driver’s license to verify
their identity. Another 56% are willing to provide personal identifying information (PII)
to prevent fraud.

Of course, many companies are already taking some level of anti-fraud measures, even
if they do not have to comply with KYC or AML requirements. But there is an opportunity
for companies to improve this process. That said, anti-fraud measures should not create aburdensome user experience, because users have been clear that that will deter them fromsigning up.

The opportunity for businesses lies in striking the right balance between these factors, soanti-fraud solutions that prioritize an efficient onboarding process can offer businesses
significant value.

Winning more customers with identity verification// 8

Winning more customers with identity verification

As consumers have adapted to fintech, their understanding of what they wantfrom their experience has taken shape. Fortunately for digital finance businesses,

consumer expectations form a clear roadmap:•Smooth, secure onboarding is a must: The sign-up process can make or break the2022 | WIN M O RE CUSTO M ERS A N D THEIR TRUST WITH IDEN TIT Y VERIFICATIO N

user experience. Consumers want to access fintech apps instantly and feel secure,so balancing rigor with speed is critical for winning new customers. For organizations
who are not already using advanced anti-fraud tactics, incorporating higher-fidelity
measures like submitting selfies can better protect customer data. Thus, choosing
tools that can quickly verify a user’s identity is key.
•Exercise transparency: Consumers have made it clear that control over data is
critical to garnering trust. Thus, businesses should be upfront about and proactive incommunicating privacy and security measures while also giving users power over how
their data is shared.

Together, these steps will not only better defend consumers against identity fraud but also
help businesses attract more new users and better meet their needs.

Learn more about preventing fraud and winning customers with Plaid’s identity
verification solution.

Plaid powers the digital financesolutions that enable millions ofpeople to live healthier financial lives.
Trusted by 7,000+ of the world’s
leading companies and connected to
12,000+ financial institutions acrossthe US, Canada, UK, and Europe,
Plaid’s mission is to unlock financial
freedom for everyone.

Ready to build the future of digitalfinance? Reach out to our sales
team at info@plaid.com.

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