How banks can balance UX and security amid a pandemic

Harnessing the power of face-based biometrics and AI

COVID-19 has had a huge impact on consumer attitudes, behaviors and purchasing habits, with many consumers forming new habits that will remain post-pandemic. The global pandemic has changed the ways in which we interact on many levels, but also, the ways that we transact.

Prior to the pandemic, bank branches were already experiencing a steady decline across the UK. Between 2012 and 2019, the total number of bank and building society branches fell by 22%. There’s no doubt that social distancing and government-mandated closures have exacerbated these figures further.

As a result, banks are forced to consider how they can securely allow their current and prospective customers to conduct the same kinds of activities remotely while keeping them safe from increasing digital fraud and cybersecurity threats.

Although traditional banks have increasingly begun to look at the ways in which they can digitize account onboarding processes, this is an area where digital native challenger banks have always excelled. But despite challenger banks being renowned for faster sign-ups and seamless customer interfaces, security still remains a top concern – the annual value of online banking fraud losses was estimated at £112 million in 2019, according to Statista.

It becomes crucial that traditional and challenger banks alike ensure that fraud detection measures – the key factor behind poor customer experience – are secure but also streamlined. So, how can this be achieved?

Striking the right balance

Accounts that are less than a day old make up 48% of all fraud value, according to RSA. Furthermore, Experian’s 2020 Global Identity and Fraud Report reveals that 57% of businesses report higher fraud losses associated with account opening and account takeover than other types of fraud.

Protecting and supporting customers during the account onboarding stage is critical, and businesses must find ways to verify the true identity of their potential customers to ensure they are who they claim to be.

Prioritizing fraud detection tends to result in slower onboarding processes because there are more hoops to jump through to attain identity assurance. This causes friction and a negative user experience which leads to increased abandonment rates – Signicat estimates that nearly 40% of potential new accounts choose to abandon the onboarding process because they find it too time-consuming and arduous. Many of these customers are then put off from returning and completing the process, resulting in a significant opportunity cost for financial institutions.

It’s imperative that banks find the optimal balance between quickly and securely onboarding legitimate customers without igniting this chain reaction. To achieve this balance, there are lessons traditional banks can learn from their challenger counterparts.

You can’t win if you don’t play

The sudden shift to the online world means many people have had no choice but to adopt digital banking. This poses the question as to how many of these digital consumers will actually decide to return to a branch location once pandemic-related restrictions are lifted.

Banks typically follow a common set of steps when onboarding new customers – although this does differ depending on whether it takes place at a physical branch or online. While banks are required to perform the necessary due diligence as part of their know your customer (KYC) and anti-money laundering (AML) obligations, many of the onboarding steps required in-branch can in fact be automated, streamlined and simplified to deliver a much better customer experience.

By leveraging face-based biometrics for digital identity verification, banks are able to discover the sweet spot between customer experience and security. It begins in the account onboarding process where banks ask the new customer to take a photo of their government-issued ID (e.g. driver’s licence, passport) via their smartphone or webcam, then take a corroborating selfie. This process utilises liveness detection to confirm that the online customer is physically present and not attempting to bypass the system using a deepfake video or a picture of a picture. The use of biometrics and artificial intelligence (AI) can make an accurate verification decision in a matter of seconds which creates a customer-friendly experience.

Taking onboarding processes a step further

As with the initial identity verification process, traditional banks cannot rely on outdated and complicated methods of ongoing authentication to build long-lasting relationships with their customers. Face-based biometrics can also help here.

During the initial selfie-taking process, a 3D face map is generated to ensure the person behind the ID is the person creating the account. This face map contains over 100 times more liveness data than a 2D photo to accurately and reliably verify the customer. Instances where future authentication is required – such as resetting a password or attempting to make a wire transfer – the customer is simply required to take a new selfie. This creates a fresh 3D face map that is instantly compared to the one associated to the account. Within seconds, the user’s digital identity is unlocked and the transaction is authorised knowing that the person making the request is the legitimate account owner.

Action starts now

More than ever this holistic approach is required as a result of opportunist fraudsters taking advantage of an extreme global shift to digital. Although the past few years has seen digital account opening at the top of the list of technologies banks intend to add or replace, the current crisis highlights the need for digital transformation, and the need for speed.

Now is the time for challenger and traditional banks to invest in the user experience and digital processes from initial account creation to account management to transaction processing. To ensure this success, banks of all stripes must first be equipped to deal with the increased demand. Harnessing the power of face-based biometrics and AI is the best way to deliver smooth digital onboarding and ongoing authentication to stamp out fraud.

By Philipp Pointner, chief product officer, Jumio