Trust is the cornerstone of financial services, and traditional banks have long had the advantage. Their decades of history, established reputations, and physical branches provide a tangible sense of security that resonates with consumers. In contrast, fintech companies, many of which are newer and operate entirely online, face a different reality. Despite offering speed, innovation, and convenience, they often struggle to inspire the same level of confidence. This trust gap is not just a perception issue; it’s a barrier to growth.
A recent report by FullCircl, “The State of Identity Verification,” quantifies this. It reveals that 68% of consumers trust banks to keep their personal data safe, while only 42% feel the same way about fintechs. Such a difference underscores the challenge fintechs face, driven largely by the lack of physical presence and heightened public concern over data security in digital environments.
The Role of IDV in Building Trust
One of the most effective tools for fintechs to build trust is robust identity verification (IDV) software. Modern IDV solutions go beyond mere regulatory compliance; they shape the user experience from the first interaction. By implementing a secure and seamless IDV process, fintechs can demonstrate their commitment to protecting customer data, a key consumer concern. The FullCircl report highlights that 74% of consumers are more likely to trust a fintech provider that delivers a secure and seamless IDV experience.
This shift in perception starts with the onboarding process. When people see that security is built into the process in a streamlined manner it creates a stronger foundation for a lasting relationship. For example, a quick document scan or a biometric check that doesn’t feel intrusive or tedious can make users feel valued and secure, setting the tone for future interactions.
Statistical Insights into Onboarding Challenges
The FullCircl report quantifies the challenges fintechs face during onboarding. It found that 38% of customers abandon the account opening process, a figure much higher than what businesses anticipate. This high abandonment rate is partly due to businesses underestimating the problem and having no strategy to address it; the report notes that 98% of businesses grossly misjudge levels of drop-off, with the actual rate of abandoned sign-ups being potentially 2.9 times greater than estimated.
Another key statistic is the time taken for onboarding. The report indicates that the average onboarding time is 35 minutes, which is 2.8 times longer than what customers would prefer. This gap between expectation and reality underscores the need for fintechs to streamline their IDV processes to make them faster and more user-friendly. Long onboarding times not only frustrate users but also increase the likelihood of drop-off.
User experience is identified as the biggest challenge facing compliance teams, yet the report reveals that 54% of businesses are not actively addressing this issue. This imbalance, where regulatory compliance often overshadows customer satisfaction, could be costing businesses dearly. By prioritizing the customer experience in their IDV processes, fintechs can not only reduce drop-off rates but also enhance overall satisfaction and trust, turning a potential weakness into a competitive advantage.
Compliance and Trust: A Dual Benefit
IDV also plays a vital role in meeting legal requirements such as Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. Compliance is not merely a box-ticking exercise; it’s an integral part of a broader trust strategy. Customers are more inclined to have confidence in
a platform that demonstrably takes its regulatory obligations seriously. When handled well, compliance becomes a signal of reliability, helping fintechs feel more credible in the eyes of consumers.
Leveraging FullCircl’s Solutions
Trusted IDV providers like FullCircl offer fintechs the tools to address these challenges head-on. Their advanced technologies ensure that identity checks are thorough without being cumbersome, reducing the time and effort required from users. By offering fast, accurate, and reliable verification processes, FullCircl helps fintechs improve both compliance and customer experience, closing the trust gap with traditional banks.
Conclusion: A Path Forward for Fintechs
While traditional banks have the advantage of history and physical presence, fintechs can level the playing field by leveraging cutting-edge IDV software. By focusing on transparency, security, and a user-first approach, fintechs can build the trust necessary to compete effectively in the financial services industry. The statistics from the FullCircl report—such as the 38% drop-off rate, 35-minute average onboarding time, and 74% trust boost with seamless IDV—highlight the urgency and opportunity. With the right tools and strategies, fintechs can turn the trust gap into an opportunity for growth and differentiation.