What is clear from the pandemic is that financial institutions need a standout online presence if they are to prosper today and in the future.

The health crisis has hastened acceptance and reliance on digital solutions for home working and shopping. The same goes for banking and payments as consumers become increasingly comfortable engaging with their bank online and embracing new technologies that help them access their accounts and make payments securely, in real time.

At the same time, financial organisations need to make sure prospective customers are who they say they are when operating in the digital world. This means verifying an individual’s ID, whether at the customer onboarding stage or when giving customers access to their accounts online. Doing so effectively can mean the difference between making sure legitimate transactions are conducted and completed, or unwittingly giving fraudsters access. Failure to have effective checks in place could also see the financial institution fall foul of AML and KYC regulations and face heavy fines.

Increase in fraud

The problem for banks is that since the early days of the pandemic began there has been a sharp increase in the frequency of fraud attempts. Across all financial products, research has revealed that fraud rates rose in the UK by 33 per cent in April 2020, when compared with previous monthly averages.

And in an age where potentially anyone, anywhere can perform an online transaction, the rigors demanded in ID verification are not as robust around the world as they could be. It’s due to a lack of standardisation and best practice in verification, and it’s unlikely this will be solved anytime soon. 

2x2 ID verification in real time

At a minimum, what should be taking place globally as the financial services sector experiences increased levels of fraud is the 2x2 ID verification approach. This requires taking two pieces of information like name and date of birth and checking them against two recognised sources, like a credit agency or utility company.

This can be best delivered by having access to billions of global records from trusted country specific reference sources, such as electoral roll, credit agency, utility company and PeP lists. What is particularly important is that this process takes place in real time. Therefore, adequate checks are made seamlessly while onboarding a new customer, delivering that all-important smooth customer experience.

Recent research has highlighted that inefficient onboarding is a key driver behind a 56 per cent abandonment rate for banking customers. Therefore, the opportunity to undertake real time checks must be one of the main considerations when selecting an ID verification service. Otherwise prospective customers will most likely head elsewhere to those that do provide a seamless and secure onboarding service.  

Expectation of speed in digital age

Speed is particularly important when consumers’ expectations are increasingly shaped by the experiences provided by the digital behemoths such as Apple and Amazon. It puts huge pressure on financial institutions to provide similarly friction-free and elegant interactions, with the importance of ease of use starting at the onboarding stage.

However, real time ID verification shouldn’t only take place during the onboarding process. Those customers seeking access to their accounts online should be able to pass ID checks in real time, whether that takes place via biometrics or another route; otherwise there’s a danger customers will walk.

As financial institutions are forced headlong down the online route by the pandemic, those that are serious about protecting their business and customers at a time of increased fraud, particularly at the onboarding stage, must deliver a seamless global 2x2 ID verification process. Doing so will also improve the customer experience and help drive growth.