How to Balance UX and Fraud in Digital Applications

Deposit account opening continues to rank among the most strategic technology investments for financial institutions, with Cornerstone Advisors reporting it as the most frequently cited initiative for enhancement or replacement as banks and credit unions focus on deposit growth and member acquisition.¹

However, many banks and credit unions are still hesitant about the digital account opening channel. Financial institution leaders have to weigh the potential for more applicants against a projected increase in operational costs to perform manual reviews and the possibility of new fraud.

According to Alloy’s 2026 State of Fraud Report, 67% of financial organizations reported an increase in fraud events affecting consumer and business accounts - 7% higher than in 2025.²

22% of financial institutions lost more than $5 million to fraud in the last 12 months, while 67% reported an increase in fraud activity.³

The stakes for fraud are higher than ever. A majority of decisionmakers agree that the related financial, reputational, and compliance risks associated with fraud are growing. The key to solve these unsettling trends is to find the right balance between a successful fraud prevention program and providing a seamless applicant experience. Technology can provide a bridge that satisfies both needs.

overcoming application abandonment

For budget-conscious or resource-constrained community and regional financial institutions, manually reviewing every account application and closely inspecting documents isn’t the best use of employees’ time or talents.

Not only is manual decisioning expensive and time-consuming, but accountholders experience delays while their information is being processed – which can cause them to abandon their applications and open accounts elsewhere. More than half of consumers who begin a digital bank account application never complete it, with excessive questions, unclear processes, and friction-filled experiences among the leading causes of abandonment.⁴

So, what’s the best way to remain compliant and efficient, while increasing the number of online account openings? A modern application interface, coupled with technology that automates the identity verification process. Using multiple, specialized data sources makes it easier to acquire more qualified applicants while dramatically decreasing both manual review time and costs.

Here are some best practices to help you achieve the right balance:

1. Implement an end-to-end solution for digital account onboarding: Streamline account opening platforms, fraud prevention, and KYC checks into a unified, automated solution to balance a seamless accountholder onboarding experience with robust risk management controls.
2. Look for a modern origination system with open APIs and tight fintech integrations. With these, you’ll be able to integrate the best identity verification and funding tools available while maintaining a smooth connection with your core provider.
3. Layer multiple data sources for a complete view of accountholder identity: You’ll see the best success by layering multiple layers of identity data products into your decisioning workflow. Sometimes referred to as the “Swiss Cheese Model” to fraud prevention, each layer has potential vulnerabilities or “holes,” similar to a piece of Swiss cheese. However, when you align them strategically, the likelihood of fraudsters getting through all the layers diminishes.
4. Centralize accountholder onboarding data in one location: Data orchestration tools help streamline all of your accountholder identity data into a single identity risk profile for each of your accountholders. This eliminates data silos and allows your teams to look at each accountholder’s risk holistically.
5. Continuously optimize risk policies: Fraud is always changing, and fraudsters are consistently looking for new vulnerabilities in the fraud controls of financial institutions. The controls you have in place today might not be suitable protection for the fraudsters of tomorrow. Savvy financial institutions invest in scalable fraud prevention technology that empowers quick workflow changes and helps avoid vendor lock by easily testing, adding, and changing new data sources.

safeguarding and enhancing accountholder relationships

Investing in a digital account opening platform – coupled with a sophisticated and layered security approach – not only enhances the accountholder experience but can also drive substantial financial benefits for your institution. Allowing the good applicants in faster while keeping the bad ones out.

Using multiple data sources simultaneously also provides protection against bad or compromised data from any one source. Alerting you more quickly to potentially fraudulent account openings while protecting both your institution and accountholders.

sources

Ron Shevlin, What’s Going on in Banking, Cornerstone Advisors, accessed August 2026.
2. 2026 State of Fraud Report, Alloy, accessed August 2026
3. Most Customers Abandon Account Opening. How to Take Back Control, The Financial Brand, accessed August 2026
4. H2 2024 State of Omnichannel Fraud Report, TransUnion, accessed January 2025.