Identity verification: Consumers’ expectations are heightening at a fast pace

Published: Wednesday August 14, 2019

Gus Tomlinson, Head of Strategy, GBG

Article originally published in Financial IT.

When you think about identity in the context of finance, there are many different things that spring to mind.

From opening an account and establishing your identity to interacting on an ongoing basis, technology has changed the way we think of working with companies. No longer do we go into a branch, email or post documents or even use passcodes. Instead, we rely on data checks, cool selfie experiences after scanning a document, or using our face or fingerprint to get access to apps.

With these processes comes a need for trust. Not only has there been a heightened awareness of good digital customer experience, but also for security of our personal data.

Balancing act

The public are, understandably, concerned about their data but - equally - want quick service when completing daily tasks like purchasing products online and accessing their bank account. It is the responsibility of financial service companies, supported by companies like us, to create trust online. This is achieved by balancing the information someone needs to capture with technology that minimises the need for excessing data capture, processing and storage. The challenge of balancing trust and customer experience can be enabled by using technology, but this requires investment and education, across organisations, consumers and regulators.

It may surprise some to hear that financial services websites have an extremely high cart abandonment rate - 83.6% to be exact. This means that there is a lot of pressure on banking service providers and financial services businesses to get identity software right. Banks are bringing in dedicated fintechs to solve this issue, as without them customers would have to go into branches to verify their identities, and risk abandoning the provider altogether. The challenge and opportunity is to seamlessly blend together trust, security and accuracy with speed and convenience to guarantee consumers feel safe.

Where banks are trusted to provide the infrastructure that sits behind banking and compliance that is required by regulators, it is the fintechs that are winning when it comes to delivering the best customer onboarding experiences. They have done this by breaking down the journey for customers, thinking about it from a UX perspective and demanding that technology and data support this.

The challenge often sits between regulation and technology. We have seen for the past few years' technology advance regulation, with UX often being compromised not from a technology perspective but a requirement to meet regulatory requirements that have in some cases been out dated.

Abandonment issues

Another, and more problematic challenge for FS, is when regulation demands more from a process, and despite technology being exceptionally good, there will inevitably be disruption in the customer experience.

A prime example of this is Strong Customer Authentication (SCA), a regulation that will come into force in March 2021. After protestations from both banks and retailers, the FCA has decided to allow extra time to implement the regulation properly.

The fear was that SCA would disrupt the smooth UX that consumers have become accustomed to when accessing online banking, and could - if implemented incorrectly - lead to further basket abandonments. Similarly, since the EU passed the fifth Anti-Money-Laundering Directive (5AMLD), firms now have to carry out more Know Your Customer (KYC) checks which means more scrutiny and pressure on customers to prove their identity online. Now that the deadline has been extended for the UK, there is renewed hope that when SCA is implemented and companies and banks are prepared, it will compliment UX, instead of disrupting it.

This is where companies like GBG have a responsibility to enable new technologies within the identity ecosystem, and make these accessible for companies to consume. A great example of this is silent authentication, something that is facilitated through the mobile device, triangulating the mobile number, the device number and the sim number.

Looking forward we can also expect more from technology, device data, Email, mobile and social, and also behavioural biometrics. All of these things will drive better customer experiences, enabling security that is ongoing and incredibly secure, and the best thing is it happens without disrupting the consumer at all. Only causing disruption when there is genuine concern that identity spoofing or theft is taking place. Identity is certainly a hot topic within financial services right now, and deserves to be looked at more carefully, in order to provide improved CX. Because disruptors in the financial services and fintech sectors have set the bar high for onboarding and developed technology to improve these processes, incumbents can no longer rely on the same legacy systems anymore. Instead, they should embrace new technologies and focus on providing a seamless experience, which is key in consumers' decision making.

Faster, slicker and more frictionless experiences - while maintaining robust fraud and compliance checks - is what is needed to minimise cart abandonment, retain customers, and ultimately attract new users to your offering.

Learn how GBG can help you build a frictionless onboarding experience to minimise abandonment here.