The world was already speeding into the digital age before Covid-19. However, the pandemic has supercharged the process prompting financial services companies to improve engagement with their customers across all digital channels.

The reason - consumers are increasingly worried about visiting high street branches in the current climate and recognise the convenience of engaging online. As a result, they not only want to quickly and securely access their accounts and other services online, but also open new ones via the digital route.

Today, there’s an urgency by banks to not only put in place quick and easy procedures for customer onboarding and in providing access to accounts, but also for them to ensure that they are dealing with the person they think they are. This requires those in financial services to optimise their digital services and verify online customers’ identities in real time, which fully necessitates embracing electronic identity verification (eIDV). 

The identity verification process, whether during onboarding a new customer or authenticating access to an account, must take place more speedily, efficiently and with a higher degree of accuracy than ever before. After all, fraud is increasing during the pandemic. Research has found that across all financial products, fraud rates rose in the UK by 33% in April. Also, application fraud will cause more than $2.7 billion in US credit card and demand deposit account (DDA) fraud losses through 2020. Furthermore, global regulations governing customer authentication are growing stricter than ever. For example, the Fifth Anti-Money Laundering Directive (5AMLD) which came into play in the EU at the beginning of this year.

eIDV critical for speedy and secure real time onboarding

The answer for effective eIDV at the customer onboarding stage involves gathering all relevant consumer information online and running cross-checks against the data they have provided in real time. This means matching someone’s name, address, date of birth, national ID number, email or phone number against reputable data streams, like government agency, credit agency and utility records. It’s vital all information matches up properly; for example the name on a credit card application matches the name public documents indicate should be associated with the address provided. This ensures data accuracy, can also help enrich the data and prevent fraud. However, to do this effectively you need access to billions of global records in real time to ensure the customer experience isn’t compromised. This is particularly important when recent research highlights inefficient onboarding is a key driver behind a 56% abandonment rate for banking customers.

Eye movement biometric algorithm for fast and secure engagement

All eIDV tools need continual modification and tailoring. For example, biometrics could be hackable with photographs, which is why it’s important to use a biometric algorithm that checks for eye movement. This ensures organisations are engaging with real live person, not a static image or avatar. This further helps to prevent fraud and also speeds up the customer ID verification process - by avoiding time consuming security questions - to help generate a standout customer experience.

eIDV and artificial intelligence (AI)

One standout form of AI, semantic technology—which has already proven its worth in the healthcare and pharmaceutical industries—is set to lead the way in the financial services sector. Semantic technology, or semtech, associates words with meanings and recognises the relationships between them. This makes it possible to apply context and make inferences with data, ensuring properly validated identities as well as broader data quality and integrity.

An important part of semtech is the machine reasoning and automated pattern recognition it provides, in real-time, to identify possible fraudulent applications. As a result, as part of the eIDV process semtech can support a more seamless online customer onboarding experience, helping to deliver a clear competitive advantage. It’s by adopting such AI-enabled identity verification and data quality technologies that integrate with existing banking software platforms, that financial institutions of any size can ensure they are know your customer (KYC) and anti-money laundering (AML) compliant.

eIDV centre stage

eIDV is essential for the financial services sector, and in fact all almost all other industries. With interactions and transactions increasingly online the cost of embedding eIDV solutions into your service or platform is tiny compared to the risk associated with noncompliance or the issues associated with fraud. Also, not fully embracing eIDV could lead to possibly losing customers to your competitors who are using a faster or more secure technological solution that you perhaps haven’t chosen just yet.

The pandemic has highlighted the need for quicker, slicker and more effective digital identity verification solutions. Those in financial services with the best chance of making it through the pandemic and into the increasingly highly digitised world will be the ones that put eIDV services at the heart of their business, and also look ahead at what AI can bring to further improve eIDV.