The intersection of digital identity verification and customer empowerment

With a wealth of information easily accessible online, today’s consumer is more connected, educated and aware than ever before. This has been especially true during the pandemic as many of the people in quarantine were able to quickly shift from physical to digital services. However, empowered consumers also present challenges across virtually every vertical, particularly banking and financial services.

Educated consumers are well aware of their options and far less likely to need hand-holding when choosing services or providers. They most often know exactly what they want and only need assistance when completing the purchase or sign-up process.

To truly compete in today’s marketplace, mobile onboarding must deliver an experience that is secure.

In the banking industry, this phase of the customer journey requires a robust digital presence that “deputises” the consumer. In other words, a process that gives the customer as much control as possible over their experience. Today, the customers experience is increasingly mobile which, combined with the abundance of information available to compare services, puts a new level of pressure on financial institutions.

To truly compete in today’s marketplace, mobile onboarding must deliver an experience that is secure, reliable and friction-free from beginning to end. Doing this well often hinges on a financial institution’s process for verifying that the person exists and is who they claim to be. It’s the moment of identity truth, essentially a virtual handshake.

Identity verification was once just a back-office function and compliance checkbox. Today, it has become a competitive differentiator and critical step in onboarding new customers and interacting with existing customers. Although less friction equals happier customers, balancing fraud and friction isn’t always easy.

Identity verification for empowered consumers

The process of applying for a new bank account online is one of the most significant barriers to successful onboarding of new customers. In fact, research by IDology conducted this year, shows that abandonment of online account enrolment processes increased 19% from 2018 to 2019. This translates to over 50% of Gen Z and over 40% of millennials reporting online enrolment abandonment.

That’s a lot of potential revenue simply walking away.

Financial institutions – especially smaller local banks and credit unions – cannot typically sustain ongoing loss of potential revenue streams. But the solution to this problem — streamlining the online account enrolment process — is often easier said than done.

Verifying a customer’s identity is the part of onboarding that involves the most end-user friction and is the step most likely to cause abandonment. However, identity verification is incredibly important. In order to maximise the number of customers onboarded, it’s imperative that the process is as smooth and free of intervention as possible.

So, what should an identity verification process look like for the empowered consumer? Can a customer’s identity really be verified and authenticated accurately through a mobile device?

Mobile identity verification

The short answer to that last question is yes, secure identity verification and authentication are absolutely feasible via a mobile device. In fact, smartphones offer enhanced identity verification capabilities that traditional PCs lack.

Today’s customer no longer wants (or has the time, frankly) to drive to a bank or credit union branch to set up a new account in person. Further, the COVID-19 pandemic has led many branches to close their doors during quarantine, driving those that still enjoyed banking in a physical environment to move their services online.

It goes without saying that many consumers today, including digital newbies, prefer to pick up their mobile phones and interact with financial services providers without interruption to their day.

With the right capabilities, mobile devices can supercharge identity verification. Advanced digital identity verification solutions can tap into real-time data streams to determine if the name on the phone service account matches that of the person signing up. Robust technologies can employ intelligence that examines mobile attributes to determine, for example, if the device has been recently lost or stolen or was involved in a SIM swap. Mobile indicators can ascertain physical location and provide another way to compile real-time profiles of new customers to determine if they are legitimate. When these capabilities are integrated and orchestrated, they provide the ability to greenlight legitimate customers without friction and deter fraud.

Mobile ID scanning

When offered the option to identify themselves, two out of three Americans said they would be extremely or somewhat likely to snap a picture of an identity document to make the verification process faster, safer and easier when signing up for a new account. This has led a growing number of financial institutions to implement mobile ID scanning technology as a way to put the customer in the driver’s seat. In fact, approximately 63% plan to implement these technologies in the next one to two years and 27% are already in the process of doing so, according to IDology data.

Mobile ID scanning technology extracts information from the ID document with a tap of a smartphone camera to populate fields during onboarding. It can eliminate mistakes that typically occur when manually entering information while also simplifying and accelerating the process, thus decreasing abandonment. Some mobile ID document scan solutions leverage multiple layers of identity attributes and correlate information to different data sources, such as consortium network or mobile carrier data, for increased security and faster approvals. And, with programmatic review of the data extracted from the ID document, financial institutions can reduce manual review and operational costs, and improve operational efficiency.

Mobile ID scan technology can be applied to multiple use cases, including know-your-customer (KYC) compliance, onboarding, account opening and management, step-up mechanisms for high-level transactions and ongoing digital mobile authentication.

The best mobile identity verification solutions prioritise three attributes: zero friction, behind-the-scenes authentication and the ability to step up to other forms of verification, such as out of wallet knowledge-based inputs, when needed.

When a company uses best-in-class mobile identity verification, customers are empowered to sign up for and activate accounts quickly, easily and without the need for assistance from customer service. Even better, when that process moves forward without friction, abandonment rates take a nosedive.

Consumers who are “deputised” to drive their own account onboarding process — including proving their identity in a simple, frictionless way — have better experiences and are more likely to be loyal promoters of your business.

The bottom line

Educated, empowered consumers are push every business to keep up with market trends and strive for improvement. They have been conditioned to expect streamlined user experiences that feel safe and trustworthy. Amid macro forces, breaches and other influences, such as COVID-19, they place a premium on security. A recent IDology study showed that knowing a financial institution was using more advanced identity verification methods would impact the decision to use that company’s services for 77% of consumers.

From onboarding and beyond, if consumers get the sense that the experience isn’t smooth or safe enough, they will go elsewhere, especially in a mobile environment. In fact, 48% of consumers in the same study abandoned online account sign-up because the process was too difficult, too time consuming or seemed untrustworthy. Don’t underestimate the empowered consumer. Consumers can be incredibly loyal to those businesses that employ a secure, frictionless identity verification process and deliver seamless mobile experience.