Physical transactions have turned digital and the speed of business has increased exponentially. In this new technology-led paradigm, financial institutions are struggling to catch up with the customer demand for speed, while weeding out fraudsters simultaneously. At the core of it all is the efficacy of identity verification – the chief determinant of seamless customer experiences.
Changing Customer Expectations
The era in which the customer was expected to “understand” is long behind us. In the pre-digital period, identity document verification was a joint responsibility where the consumer had to provide a list of government-issued identities and paperwork, and then wait patiently. Financial institutions would take time to verify all the details as well as the authenticity of the documents themselves. With the advent of digital technology, this has changed drastically and the banking, financial services, and insurance (BFSI ) industries had little time to adapt. In their quest to keep up with customer demand, they had to move faster — but without compromising identity verification standards. To do so could lead to increases in fraud, manual review and false positives.
Cross-National Regulations – The Lack of Uniformity
Going global seems to be among the prime objectives of most businesses today. However, country-specific regulations that cover financial transactions—and, by extension, identity verification— can turn out to be a roadblock. Obviously, financial institutions that help their customers overcome such challenges without any interruptions have the upper hand. This task, however, is easier said than done.
Each country lays down its own regulatory norms when it comes to identity verification. For instance, regulators in the United States and the United Kingdom veer towards a risk-based approach. In other words, they allow regulated entities (like the banks) to choose the method they find most suitable. And such a choice usually depends on the level of risk that a particular organization is exposed to and/or is comfortable with. Other countries, like Canada, take a slightly different approach. These counties clearly identify the identity and document verification instruments that are acceptable for use in business. That said, there are several universal commonalities such as verification of date of birth, name, address, etc. Of course, the end goals are the same, like conforming to anti-money laundering and counter-terrorism financing guidelines.
The Problem with Existing Solutions
When examining the identity verification landscape, it is clear that the path is riddled with challenges: regulatory compliance, third-party dependence, and consumer experience. The industry needs a solution that is frictionless, quick and reliable.
Technology comes in handy in this scenario. However, one has to be careful when choosing the right technology, as it’s an I-am-the-best slugfest out there with each solution vying for your attention. Many of these, unfortunately, rely on a single method or data source for identity verification. It’s like putting all your “business” eggs in one basket and hoping no one drops it.
The Ideal Service Solution
Banking businesses experience less fraud and increase auto-approval rates when they utilize an identity verification solution that collects customer data from a diverse range of sources. The data must be a blend of online and offline sources that generates a footprint which is beyond manipulation. ID document verification should also be an option if the platform raises a red flag.
To assure customers of a seamless experience—and reduce/eliminate abandonment at the onboarding stage—the solution must be quick, returning results in milliseconds. It should also leverage a single RESTful API that queries multiple data sources to complete the digital verification process.
In summary, the business objectives are to avoid fraud while creating the ability to accept more customers and reduce manual reviews. A solution that continuously improves itself through built-in machine learning algorithms is ideal to keep up with the ever-increasing demands of the consumer.
Every new-age financial institution must look at making an investment in such a solution.
Peter is Senior Marketing Director at Socure with the focus on redefining identity verification in the financial space with superior data science. He is passionate about educating prospective customers on the positive impact of the Socure solution on auto-acceptance rates and fraud detection. He has handled marketing for companies over the years with an emphasis on driving strategy and execution.
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