As concerns over COVID-19 continue to grow and communities around the nation shelter-at-home, consumers are avoiding the branch and turning to digital banking services in record numbers. This opens up a completely new market for banks to capture those who once preferred the branch, but are now conducting all of their transactions from their home computers and mobile phones.
A recent survey from OneSpan of more than 100 banking professionals sheds light on the branch usage before the pandemic, as well as the barriers and opportunities that exist to capture a greater pool of digital-ready customers. Two key findings include:
Inadequate customer experience and security are causing financial institutions to lose customers and money. The combination of poor customer experience in digital channels and ineffective security negatively impacts customer loyalty, retention and profitability. Sixty percent of the banking executives in the survey agreed that poor customer experience was the top reason potential new customers dropped out of the remote account opening process. In addition, nearly half of the respondents rated the security of their current remote account opening process as only “somewhat secure” or even “not secure,” largely due to the high levels of fraud they experienced.
Legacy technology is slowing bank innovation. Almost 60 percent of the banks surveyed said their primary method for opening new accounts remained in-person, in the branch. Almost half cited a reliance on legacy systems with manual identity verification requirements as the primary reason they could not yet provide a fully digital account opening process. Now, in the wake of COVID-19, banks must expedite their plans to fully digitize their services and improve the customer experience in the online and mobile channels.
Forward-thinking banks are rapidly adjusting their digitization efforts to meet customers in their moment of need. Here are five banking processes that banks must digitize during COVID-19 and beyond, and the technologies they can adopt to make it happen.
1. Commercial and small business lending
With the recent Coronavirus Aid, Relief and Economic Security (CARES) Act, the federal government has issued an economic stimulus and relief package for businesses affected by the pandemic. Time is of the essence as banks work to distribute these funds, and the adoption of e-signature technology with built-in capabilities for audit trails and workflow automation can dramatically streamline the process.
2. Consumer lending
Because many consumers use their mobile phone as their primary device for accessing the Internet, one area that many banks and alternative lenders are re-prioritizing is the mobile channel. Banks must pivot to a mobile-first mindset, building-out and enhancing lending workflows through the mobile app and strengthening security. Two technologies that will be important in this process are mobile e-signatures with digital audit trails, which allow banks to quickly capture signatures while maintaining compliance; and mobile application shielding, which protects the mobile banking app from cyberattacks, mobile malware and account takeover.
3. Remote bank account opening
Even in the current environment, prospective customers are trying to open new accounts. Banks that still rely on manual identity verification and/or a signature in the branch will miss the opportunity to capture new customers during this time. By implementing digital ID document verification with biometric facial comparison, banks can enable new customers to verify their identity quickly and easily. When combined with mobile e-signatures, banks can make the remote account opening process a breeze, keep it entirely in the mobile channel and reduce fraud at the same time.
4. Residential mortgage agreements
With potential buyers unable to visit properties, many sellers have quickly innovated and shifted to virtual tours. Likewise, the mortgage approval and closing processes are also going virtual, with lawyers and notary signing agents adopting e-signatures. Before the coronavirus, 23 states allowed remote online notarization. Now, at least 19 additional states have enacted emergency measures to allow remote notarization. This advancement will not fade once the current pandemic is over. Even after the crisis recedes, expect to see greater adoption of digital mortgage closings and remote online notarization.
5. Account maintenance
Banking customers tend to go to the branch to manage changes to existing accounts and many such changes require a signature. Some, like adding a new spouse to an existing account, also require that the bank verify the new joint account owner’s identity. But with branches limiting hours and customers unable to visit due to shelter-in-place restrictions or heath concerns, banks need to adapt these processes quickly with e-forms, e-signatures and digital identity verification, so they can be securely and easily executed online or via mobile phones.
The way financial institutions must serve their customers has rapidly changed due to the COVID-19 pandemic. During these uncertain times, supporting customers will require banks to swiftly adjust their offerings and implement new technologies and processes to provide the digital capabilities customers need. By focusing on customer experience and strong security, while moving past the legacy technologies that have been holding them back, financial institutions can serve their customers in their time of need while positioning themselves for future success and growth.
Sameer Hajarnis is the practice leader for e-signatures and agreement automation at OneSpan, an anti-fraud and digital identity solutions company for the financial services industry.
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