Five steps to build trust in the digital age

With more people engaging and transacting with organisations online during the pandemic, there has been a corresponding rise in fraudulent activity. In the banking industry the Office for National Statistics (ONS) found a 68 per cent increase in remote banking fraud in 2020. Furthermore, research from UK Finance reveals that £479 million was lost to scams in 2020, where people were tricked into making bank transfers to fraudsters. This type of fraud called ‘authorised push payment’ (APP) fraud, increased five per cent in 2020.

As fraud grows there’s a danger consumer confidence with the financial services sector could plummet. This makes it imperative that financial institutions take steps to demonstrate they can be trusted, particularly as fraud continues to evolve and surge in the digital age.

Those in financial services, whether a bank, money transfer or trading platform, can build this trust in five ways:

1)     Deliver best practice AML / KYC screening worldwide

The very first time a prospect interacts with your organisation is when you must start to build trust. New customers need to know that you carry out thorough Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, rather than treating the process as a tick box compliance exercise.

To achieve a high level of KYC and AML compliance, it’s vital that financial institutions have access to billions of consumer records worldwide from reputable data streams. These include government agency, credit agency, and utility records for cross-check and verification purposes against the home address, email address, phone number, and date of birth provided by the prospective customer. It’s also crucial this dataset has access to up-to-date watch lists, such as politically exposed persons (PEP) data. Having access to such data will ensure vital proof of identity, as well as help fill-in any gaps in customer records, such as a missing email address or telephone number, which enables improved communications.

It’s essential that checks leveraging this data take place in real time to avoid slowing the customer onboarding process, and therefore provide a standout customer experience.

2)     Use proven technology to deliver secure, real time online customer onboarding

It’s vital when onboarding a new customer online, and also when ensuring fast and secure access to their account on an ongoing basis, to use proven technology that has demonstrated its value in abating fraud. For example, machine readable zone (MRZ) and optical character recognition (OCR) technologies readily collect customer ID and obtain crucial information at the onboarding stage. It’s established tools like these that make sure the ID is genuine as well as validated in real time. The photo ID embedded in these scanned documents supports biometric ID verification, such as facial recognition, which can also speed up customer engagement, securely. Liveness checks, such as eye movement, must be delivered by biometric technology for proof of life confirmation. This stops fraudsters who are increasingly using creative methods like 2D images and video playback to try to trick facial recognition technology and ‘prove’ they are the person they are impersonating. Importantly, biometric processes can support financial services organisations as part of their due diligence reporting related to AML and KYC. These operations demonstrate their compliance when it comes to regulatory checks, and therefore help engender trust amongst prospects and customers.

3)     Personalise customer communications to build trust

Eighty per cent of consumers are more likely to do business with a company that offers personalised experiences according to Epsilon. With financial institutions, this figure rises to 89 per cent. Additionally, research by the Boston Consulting Group highlights that over $800 billion in revenue will shift to the top 15 per cent of companies who get personalisation right in financial services, retail, and healthcare over the next five years.

These figures demonstrate that personalisation is clearly worth the effort, particularly in the financial services sector. In this highly commoditised world of banking products it’s the customer experience, driven by personalisation, that creates a point of difference. Personalisation of customer communications also helps to build trust amongst customers, because it demonstrates they are understood, something the digital behemoths like Amazon and Google do very well.

Also, with personalisation there’s an opportunity to build greater revenue from customers. Financial institutions have access to a huge amount of valuable transactional data on customer spending that they can analyse and use to deliver highly personalised upsell and cross-sell communications. For instance, if it appears a customer has booked a holiday, the bank can communicate useful and convenient travel currency and travel insurance offers. Via such engagement organisations can become trusted advisors by alerting customers at the right time that they may need a highly applicable credit or a savings product.

4)     Multi-level verification for protection and reassurance

A multi-level verification process is crucial to protect transactions made online. For example, customers may be provided with a one-time password (OTP) when transferring funds from one account to another. Since this OTP would be sent to the customer’s registered phone number or email address, it minimises the risk of the transfer being made by an imposter. To verify large-value transactions banks may call the customer to confirm it’s them making the payment. This approach adds customer service value, particularly for new users to online banking and payments who need to be reassured sufficient checks are in place to protect their money transfers and electronic purchases.

It's also important to recognise that real time verification of phone (including Caller ID), type of phone, country of origin, and email mailbox verification are all highly effective in supporting OTP or similar types of verification.

5)     Use location data to detect possible fraud and protect customers

It’s possible for financial institutions to mine a wealth of data from a customer’s interaction with their website or app. One of the most important in preventing fraud is the geographic location of the customer. When a transaction takes place the customer’s real-time location can be compared with data on the locations where they have made purchases previously. If it does not match, for example the purchase is taking place on a continent the customer may not have visited before, the bank can contact the individual and verify the activity prior to its completion. Additionally, if a customer usually accesses the financial institution’s website to make payments and a sudden rush of activity is instead seen on the app, it’s worth confirming the customer’s identity before any transaction is finalised.  

With fraud on the rise in an online world building trust amongst prospects and customers has never been more important for financial services organisations. It’s time those in this sector take a step back and look at ways they can engender trust. It’s only by adopting a best practice approach to KYC and AML verification, using proven technology at the customer onboarding stage online, and embracing biometrics, that organisations are able to take a giant step forward in generating trust. To add additional layers of trust it’s important to embrace personalisation, using technology for multi-level verification and sourcing the geographic location of the customer at the time of transaction. It’s those who take these five steps who are best placed to provide a valuable, standout service and deliver long-term growth in an increasingly crowded market.