Navigating the digital identity landscape: A blueprint for financial services competitiveness

In the fast-paced realm of financial services, digital transformation is reshaping the competitive landscape. The emergence of digital disruptors has redefined customer expectations, emphasising the need for seamless, secure, and tailored financial experiences. 

As Charles Darwin aptly noted, survival depends on adaptability to change. In today's financial arena, this adaptability hinges on embracing digital identity technologies to meet evolving customer demands.

The pivotal role of digital identity

Challenger banks, neobanks, and fintechs have set a new standard for customer experience by leveraging streamlined digital journeys. Legacy technology presents hurdles ranging from security risks to prohibitive costs, constraining innovation and customer service for traditional institutions. Consequently, profitability and trust, pivotal aspects of competitiveness, are under constant challenge.

Despite this, established financial institutions possess key capabilities —brand recognition, regulatory licensing, and market reach —that, when coupled with digital identity technologies, can level the playing field.

IAM platform convergence

Many financial institutions still rely on outdated Identity and Access Management (IAM) solutions, limiting their ability to respond to threats and comply with regulations and their ability to deliver greater customer experiences. Not only does this inhibit their ability to respond to threats and meet their regulatory requirements,, but it also puts them at a disadvantage compared to more nimble peers. The shift towards converged IAM solutions, covering all identity needs, is gaining momentum, driven by the imperative for agility and future-proofing.

Actionable strategies for success

1. Modernise IAM Infrastructure: 

IAM modernisation drives agility, innovation and a better form of digital transformation. Legacy solutions, often siloed and cumbersome, hinder the ability to deliver frictionless customer experiences and adapt to evolving security threats. Financial institutions can enhance security, improve customer experience, and drive innovation by transitioning to a unified scalable platform. This approach simplifies the way in which customers access services, and facilitates compliance with increasingly stringent regulatory requirements.

2. Build a Single View of the Customer:

Understanding your customer is paramount in the digital economy. Fragmented data obstruct the delivery of personalised services and diminishes customer satisfaction. By integrating data across systems to build a single customer view, financial institutions unlock real time understanding that drive hyper-personalisation, enhancing customer engagement and loyalty. This customer insight supports the development of tailored financial products and services and meets the individual needs of consumers.

3. Orchestrate Customer Journeys:

The digital age demands customer journeys that are secure, seamless and intuitive. Having the ability to build, test and deploy seamless, secure and scalable digital interactions from onboarding to transaction processing enables rapid deployment and iteration. This approach ensures that customer experiences are both engaging and secure, fostering trust and satisfaction.

4. Secure Sustained Customer Trust: 

Trust is the cornerstone of financial services. In a landscape where cyber threats and fraud are ever-present, securing customer trust necessitates robust identity verification and authentication strategies. Implementing frictionless, multi-factor authentication and leveraging advanced risk analysis techniques are crucial in protecting against fraud and enhancing customer confidence. In addition, having the ability to control which third parties data is shared with is a key step in driving greater trust with end customers

5. Expand the Value Ecosystem through API-first Approach: 

The future of financial services is inherently collaborative, with Open Banking and API-driven integrations facilitating a new ecosystem of financial innovation. An API-first strategy allows financial institutions to engage with third-party providers securely and efficiently, unlocking new opportunities for value creation. By embracing APIs, institutions can extend their service offerings, entering new markets and driving customer-centric innovation. 

Embracing the future

The journey towards digital excellence presents both challenges and opportunities. By embracing digital identity as a strategic asset, financial institutions can not only survive but thrive in the digital era. As Darwinian principles suggest, adaptation and evolution are key to ensuring success in the digital financial age.