As financial institutions move from legacy systems and antiquated processes to modernized infrastructure and services that will meet consumer demand for seamless digital experiences, identity verification is playing a critical role in success. As fraud risk continues to increase and regulatory pressures tighten, having the right strategies, processes and technology in place to verify customer identities safely and quickly will be key for creating better digital banking experiences and driving growth.
We asked Heidi Hunter, vice president of product innovations at GBG Americas to answer some common questions about the ways that a robust identity verification solution can create a positive experience.
How does identity verification contribute to growth?
There’s no doubt that customer acquisition has become more challenging. Not only are banks moving away from traditional models, but customer acquisition is inhibited by intensifying competition from megabanks, neobanks and fintech firms. With shrinking marketing budgets, financial institutions still must make every dollar and interaction count.
This comes into play with growing consumer expectation for a solid digital-first experience. With the growing number of consumers forgoing visits to branches to open new accounts, the speed and simplicity of digital account opening are a top priority. Thus, digital onboarding is a make-or-break moment in the customer journey and must be frictionless, simple and non-intrusive. At the heart of this experience lies an identity verification process that is secure and seamless.
A growing digital landscape also means more thin-file customers, who may have been unable to access the financial system due to a lack of identity proof. Financial services providers are unlocking new customer segments by leveraging identity verification that takes advantage of diverse and alternative data sources to verify thin-file consumers.
How can identity verification create positive brand experiences?
Americans are less trusting and require more assurance, especially during the “trust moments” associated with new account creation, such as identity verification. Our 4th Annual Consumer Digital Identity Study revealed that 87% of consumers are selective when deciding to do business with companies that collect their Personally Identifiable Information (PII).
With a data-diverse identity verification solution, financial institutions can quickly verify consumer identities without collecting excessive data by analyzing readily available but less invasive information such as IP addresses, phone numbers and email addresses. Not only will this put the mind of the customer at ease, it will also ensure verification during onboarding is quick, easy and step-up verification methods are used only when necessary.
How can financial institutions use identity verification to ensure seamless digital experiences are also secure?
Financial institutions shouldn’t have to compromise security for a seamless customer experience. The right identity verification solution will balance risk with modern digital consumer needs and expectations. Removing unnecessary friction during the identity verification process is critical, as evidenced by 93 million Americans in 2020 who abandoned signing up for a new account because the process was too difficult, too time-consuming or did not seem trustworthy.
Improving the customer experience while also deterring fraud requires a digital identity verification solution that can “orchestrate” multiple dynamic data sets to not only detect and deter fraud but also deliver a seamless customer experience.
You mentioned the growing opportunity to gain market share among thin-file consumers. Can identity verification also help financial institutions reach consumers with limited credit history?
Across the board, identity verification will play an important role in helping financial institutions reach consumers who may not have established credit or lack traditional identity documentation. With the ability to use alternative data sources to verify identities, financial institutions can gain loyalty among valuable customers that are more difficult locate and verify than the average American.
The potential is significant. Millennials and Gen Z are now the largest generational demographics in the U.S. According to 2019 Morgan Stanley research, millennials are the largest driver of net new loan demand and will continue to be for the next eight years. And while Gen Z are still kids, they could set the pace for how banking evolves. Up to 80% of smartphone-carrying Gen Z members are already using mobile banking. To lead and grow, financial institutions must rise to the challenge of engaging younger consumers and that relies heavily on digital identity verification, whether on a computer, tablet or mobile device.
For more information on how to balance security with a seamless digital banking experience, watch Heidi Hunter’s conversation with Jim Marous of The Financial Brand.