We all verify our identity every day, often multiple times per day. For many of us, punching our PIN into a point of sale (POS) machine or signing our name on the dotted line has become so commonplace that we barely register we’re doing it. Meanwhile, institutions still require more thorough verification for high-value agreements, such as opening a bank account or authorizing wealth transfers.
In general, ID verification today remains a slow, manual process. At best, its inefficiencies inspire grumbling from everyone involved; at worst, this process can actually expose organizations to additional risk. From an operational efficiency standpoint, manual verification happens slowly, usually requiring customers and sometimes staff to visit a specific location.
According to the World Economic Forum
, “it no longer makes sense to rely upon physical documents as the only mode [of verifying identity]” and that “given the various market factors ... as well as its position of trust, the financial services sector could potentially revolutionize the future of identity services.”
Change is not optional
Fraud represents an immediate result of poor identity authentication processes. This isn’t just limited to accounts — it extends to credit card applications, check fraud and loan stacking. In a recent survey by Accenture
, 70% of banking operations leaders identified fraud and risk management as their top priority.
According to an Ernst & Young report
on enabling trust and digital identification, “the current lack of standardized authentication and authorization mechanisms leads to a poor customer experience due to these common challenges.” The report continues, listing these familiar pain points:
» “Every new onboarded customer must provide information, leading to time-consuming, repetitive new product application processes.”
» “Newly developed products are tied to the creating institutions and are difficult to switch or move around, without repeating arduous onboarding procedures.”
» “Increasing levels of private company and personal information to open a new bank account necessitates lengthy forms and supporting documentation.”
When documents contain highly sensitive information, you can’t afford to take risks. Financial services firms collect sensitive information throughout the customer lifecycle. Every touch point with the customer starts and ends with an agreement — be it forms and data collected to ensure customer identity while securing a loan, or authorization requested to transfer wealth.
The future of identity verification
In the coming years, expect to see an increased focus on generating fast, frictionless agreement processes that result in increased conversion and customer satisfaction while maintaining security and compliance. Financial services will have a wide array of sophisticated authentication tools and offerings at their disposal, from mobile phone verification to biometric tech. These options will function simply enough that businesses can incorporate them into their current systems, providing a sense of safety to all customers.
From real-time identity verification to facial recognition, these tools will offer the ability to determine and establish customer identity remotely. Given customers’ reliance on mobile phones, ID verification by sending access codes or SMS will increase. AI-based systems will monitor behavior to flag irregular or suspicious behavior.
As scrutiny of financial transactions increases, full digital audit trails will provide the ability to view and report on who provided consent and when, helping firms deliver evidence of regulatory compliance.
Key opportunities to build a robust identity platform
Consumers already demand financial services that are easier, faster and more accessible. A growing number of people no longer have the time or patience to walk into a physical branch and open an account or deposit a paper check. They want the ability to conduct digital transactions and obtain responsive service through intelligent self-service tools. They also expect consistent experiences, whether they choose to bank online or walk into a branch. Focusing in on the following three key moments in a customer’s lifecycle offers opportunities to elevate the digital experience.
1. New customer onboarding or new account creation
The heart of a customer’s first experience with your firm lies in your onboarding process, making this a critical influence on how that customer perceives your brand. Even today, most firms struggle to simplify the processes, since regulatory requirements such as Know Your Customer (KYC), Anti-Money Laundering (AML), tax and country-specific data privacy rules all add to the complexity. The following ID verification scenarios demand onboarding before any trading is carried out:
» Authorizing an associated party to carry out transactions
» Welcoming a new client to a transaction
» Enabling a current client to purchase a new financial instrument
By digitally verifying client identity
and capturing verification documents in an automated and streamlined fashion, you save time, increase productivity, reduce risk, and provide a better experience.
2. Mobile banking
Mobile-enabled banking services are critical to the future of banking. More people than ever want to conduct a range of transactions on their phones or tablets. There’s no question as to why: banking on your own devices, wherever you happen to be located, is far more convenient and less stressful.
A modern banking experience will integrate biometric and authentication techniques into apps or online login options. Maintaining identity across devices and platforms will make it easy for customers to transact seamlessly.
3. Customer service
Simple transactions such as updating beneficiaries or ensuring disclosure acknowledgement should not require a visit to a branch. Issues concerning disputes (for example: Regulation E) or income verification (for example: form 4506T required by the IRS) are typically time bound and would benefit significantly from faster turnaround times.
As customer loyalty becomes more fickle and competition from established tech giants looking to enter the fintech space intensifies, you need to consider how you can simplify and speed up business for your customers. Every customer touch point offers an opportunity to eliminate the burden of paperwork. By establishing identity digitally, you can capture consent on key agreements, making it easy for your customers to take care of business on the go.
Nisha Pattan, a financial services marketing director at DocuSign, is responsible for go-tomarket strategy and marketing.