How Poor Bank Security Experiences Are Pushing Customers Toward Competitors

Consumers continue to place significant trust in banks and credit unions to safeguard their money and personal data — but that trust now comes with a sharper set of demands.

According to Entersekt’s 2026 research, a growing divide is emerging between security, convenience, and user control. Today’s customers expect their financial institutions to proactively detect threats while simultaneously demanding that security measures reflect modern technology and offer meaningful personal choice. This creates a formidable challenge for institutions still relying on fragmented systems and outdated authentication protocols that consumers are increasingly quick to dismiss.

Key insight: The report points toward a more adaptive, context-aware model — one where authentication, fraud detection, customer behavior analytics, and device intelligence converge to make real-time security decisions. This isn’t about layering on another checkpoint; it’s about designing a digital banking experience where stronger protection feels seamless, intelligent, and truly worthy of the trust customers place in their institution.

Essential Takeaways:

• Ninety percent of survey respondents rank security as a top factor when selecting a financial institution.
• Authentication has evolved into a core customer experience issue. Consumers increasingly judge their bank by the security methods they encounter, and 43% would consider switching providers based solely on authentication quality.
• Technology gaps are plainly visible to consumers. Text-based one-time passcodes (OTP) remain the most widely deployed authentication method despite being among the least trusted.
• Trust does not mean surrendering control. Fifty-nine percent of consumers trust their financial institution to flag suspicious transactions without requiring their review, while 28% still want an active role in deciding which transactions need approval.
• More than half (59%) are comfortable with their institution flagging suspicious activity independently, yet 28% prefer to participate directly in approval decisions.

Trust Is Still Banking’s Most Valuable Currency

Most consumers continue to view financial institutions as reliable custodians of their money and personal information. However, Entersekt’s research suggests that trust is now increasingly tied to the quality of the digital security experience itself.

More than 90% of respondents identified security as a top consideration when choosing where to bank. Consumers also expect their institution to act as a security authority: 60% trust their bank to select the most secure authentication methods, while 59% trust it to identify suspicious transactions without requiring them to review every detail themselves.

For bank leaders, security can become a powerful strategic differentiator. It extends well beyond the fraud department or compliance function — it can directly influence customer acquisition, retention, and overall brand perception.

The stakes become even clearer when consumers are asked whether security concerns could change where they bank. Forty-three percent say they would consider leaving their current institution based on its authentication methods alone. That makes authentication a customer experience decision as much as a cybersecurity one.

The problem? Consumer expectations are moving faster than many institutions’ technology. The report identifies legacy infrastructure and constrained budgets as major reasons why community and regional banks continue relying on older authentication systems.

Key insight: Retail banking leaders should evaluate authentication through the same lens they apply to other customer-facing experiences. How much effort does it demand? How does it impact trust? Does it match what customers perceive as secure? And does the institution possess the intelligence to determine when additional verification is genuinely necessary?

Authentication Faces a Growing Trust Deficit

A clear disconnect exists between what financial institutions deploy and what consumers actually trust. Text-based one-time passwords illustrate the problem. Nearly half of respondents reported that their institution uses SMS OTP, yet only 18.2% consider it the most secure verification method.

Push notifications fare similarly poorly: 27.1% reported their use by financial institutions, while only 9.3% viewed them as the most secure option. Meanwhile, half of respondents consider biometric authentication — such as fingerprint or face ID — the most secure option, yet only 41.1% reported that their institution offers it.

Biometrics, however, are not a silver bullet. The report notes that AI-powered attacks — including voice cloning, deepfakes, and techniques designed to circumvent live biometric checks — introduce fresh vulnerabilities.

Social engineering poses yet another threat, because legitimate customers can be manipulated into authorizing fraudulent transactions themselves. Authentication can confirm who is initiating a transaction without necessarily determining whether that transaction is legitimate.

That distinction matters as fraud grows more sophisticated. A customer can successfully authenticate and still fall victim to a scam.

Key insight: Rather than relying on a single credential, institutions can combine authentication methods with device signals, behavioral analytics, and real-time fraud analysis. The goal is to make security decisions based on the full context surrounding each transaction — rather than repeatedly asking customers to prove who they are.

Consumers Want Security Without Losing Control

The research also challenges a common assumption about personalization. Consumers may want their bank to make more decisions on their behalf, but they don’t necessarily want those decisions made without their involvement.

Consider suspicious transactions: 59% trust their institution to flag suspicious activity without requiring review, while 28% want an active role in determining which transactions are flagged for approval.

Authentication reveals the same pattern: 60% trust their institution to apply the most secure methods, while 24% prefer to choose those methods themselves.

Personalization, at its core, is about giving customers meaningful choices. Even a highly automated security system must clearly communicate what is happening, why an action was taken, and where the customer retains control.

While customers may welcome technology that reduces security friction, they need confidence that their institution remains accountable for the decisions made on their behalf.

Building Intelligence Behind the Digital Experience

Today, authentication and fraud detection are frequently treated as separate functions, creating fragmented views of customer activity. Banking leaders instead have the opportunity to bring together data already generated across the customer journey — including purchase behavior and authentication events across devices — and apply machine learning and AI to identify fraud patterns in real time.

This approach delivers a significant customer experience benefit: more security can happen without adding more steps. Friction is useful when it stops a genuine threat, but unnecessary friction can drive abandonment and erode trust.

Security modernization should focus on making the experience smarter rather than simply stricter. For instance, a customer whose device, behavior, and transaction patterns all look familiar should not encounter the same authentication process as someone whose activity appears anomalous.

That is where security becomes a genuine competitive advantage. Consumers already expect their financial institution to protect them. Institutions that translate that expectation into adaptive, transparent, and low-friction digital experiences will be best positioned to preserve the trust that remains one of banking’s most valuable assets.

Jessia Kendall has more than 20 years of experience crafting communications, research, and stories for enterprise technology and financial services organizations, including Spinwheel, MX, and USAA.

Source: thefinancialbrand.com