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.

"We are at a critical tipping point in the financial services industry. Fraud attempts are inevitable, making best-of-breed security more than just a defensive measure, but a powerful market differentiator. As fraud evolves, financial security prevention must prioritize authentication efficiency to maintain customer trust and secure consumer loyalty. The findings in this report clearly show that consumers are educated on authentication methods and will reject the friction of those that are overutilized, like OTP– actively seeking institutions that prioritize modern security."

Dewald Nolte, Chief Strategy Officer at Entersekt.

The companies involved

Entersekt is a global specialist in digital banking fraud prevention and payment security. The company focuses on providing authentication solutions that aim to balance high-level security with a seamless user experience, helping financial institutions secure their digital channels against evolving threats. By moving away from vulnerable legacy systems like SMS-based passcodes, Entersekt positions itself as a provider of modern, multi-factor authentication technologies.

The report features insights from Datos Insights, a firm that provides strategic advisory services to the financial services, insurance, and retail technology industries. Trace Fooshée, who serves as a Strategic Advisor for Datos Insights, contributed to the report's analysis regarding the balance between security requirements and user experience. The collaboration between these two entities highlights the intersection of technical security deployment and the broader strategic implications for institutional growth and market positioning in the U.S. banking sector.

What FF News has reported before

FF News has previously tracked Entersekt’s leadership changes and its trajectory in the global security market. In July 2026, we covered the news that Entersekt Appoints Clare Conway as CEO to Drive Global Fraud Prevention Growth, a move intended to scale the company's international presence. Additionally, our coverage of the broader banking landscape, such as the CheckAlt Report: 75% of Banks Target Receivables Modernization as Commercial Competition Heats Up, reflects the ongoing pressure on regional and community banks to modernize their digital offerings to remain competitive against larger incumbents.

What this means

This report confirms that the "invisible security" trend may be hitting a wall. While fintechs have spent years trying to remove friction, consumers are now signaling that they actually want to see the "lock on the door," provided that lock is modern and effective. The fact that nearly half of customers would switch banks over authentication methods puts immense pressure on community and regional banks. These institutions can no longer rely on the perceived safety of one-time passcodes. To survive, they must offer customizable security experiences where the user feels in control, or risk losing their deposit base to more technologically agile competitors.