How address verification can solve a number of challenges for those in financial services in 2022

Address verification is often viewed simply as a practice that improves the accuracy of direct mail. However, it offers much more than that to the financial services industry that’s facing a number of challenges in 2022.

Improve the customer experience and reduce cost with communications

The financial services industry is a major user of direct mail - whether distributing customer communications on changing interest rates on accounts, exceeding overdraft limits, new products and services, through to bank statements.

Unfortunately, unverified, inaccurate address data can lead to mis-deliveries and returns that are costly for banks. However, inaccurate data is not only costly from a monetary point of view, but when it comes to the user experience. If customer does not receive their expected communication from a bank, or it’s delayed, it will not leave them with a good impression on the sender. There can also be an additional cost for the customer if it’s a late arriving letter on exceeding an overdraft limit, for example, which will further sour their relationship with the financial services organisation which sent it.

Bear in mind if customer bank statements or other sensitive financial information, such as debit cards, are sent to the wrong address there are fraud and security implications. This makes having address accuracy, therefore checking and verifying an address, absolutely key.

ID verification

Address verification helps to confirm the ID of an individual, which is vital with ID fraud on the rise in an increasingly digital age. Matching a name to an accurate physical address using a trusted source of reference data, is a critical step in making sure address data is clean, up to date, ID is verified - the user is who they say they are - and it’s ready for use.

Sustainability

The issues of carbon neutrality, and more widely sustainability, are hugely important in this sector, along with many others. The recent COP26 Conference has pushed it to the top of the agenda for many in financial services, along with their stakeholders. The vast majority of customers, prospective customers and other stakeholders want those that supply them with services to be sustainable, and they want to know what they are doing to reduce their impact on the environment.

Financial institutions should expect to see more laws like the UK’s Social Value Act, which requires those who commission public services to think about how they can also secure wider social, economic and environmental benefits. They will only appoint those that will help them in these objectives.

A commitment to address verification will ensure accuracy with verified addresses, reducing carbon emissions from producing and distributing incorrectly addressed mail that will be returned, and have a positive impact on their efforts at sustainability.

Inaccurate data a constant issue

Having stale and inaccurate contact data is a problem facing all sectors. Constant attention is required because the quality of data in a database will decline quickly. Contact data degrades at two per cent per month, with 25 per cent of data being corrupted on an annual basis as people move home - 2.2 million individuals move every year - obtain new mobile phone numbers or pass away. There are significant time and cost implications in correcting this data, with an average of two per cent of an organisation’s revenue lost on modifying it. It’s time and money that, for example, could be better spent on other areas of the business.

One of the biggest issues is caused by an increased reliance on user provided data via mobile phones. It’s led to an increase in collecting inaccurate data at the customer onboarding stage. Those typing in their contact information on a small screen are much more likely to mistype. It’s perhaps not surprising that approximately 20 per cent of addresses entered online contain errors such as spelling mistakes, wrong house numbers, and inaccurate postcodes.

Address verification and lookup

Address verification and lookup tools are set to play a vital role in ensuring accurate address data in 2022. They automatically reveal the correct version of the address at the onboarding stage as a prospect completes an online contact form, enabling them to select one that’s not only accurate but easily recognised, and correctly formatted for their country location. This will negate the cost of correcting data later.

An additional benefit of an address lookup tool is that as well as preventing mistakes caused by fat finger syndrome, it reduces the number of keystrokes required when typing an address on a small mobile screen by up to 81 per cent, improving the user experience.

The address verification service that is used must have access to the Postcode Address File (PAF) from the Royal Mail, which ensures it’s able to enrich data by filling in any gaps such as a missing postcode. Ideally, it should also be able to provide geocodes that deliver latitude and longitude coordinates, in order to gain pinpoint (rooftop) accuracy, and therefore improve the delivery and user experience. It must also have the ability to retrospectively correct and enrich user address data.

Obtaining verified address data in 2022 will enable those in financial services to improve the accuracy of their held address data, which will not only reduce the cost of mis-deliveries and sensitive financial information going astray, but reduce the chances of ID fraud, and their impact on the environment. They will also be more likely to deliver a standout customer experience.