At first glance, today’s banking sector is ripe with innovation. In just a few years, the number of challenger banks globally has more than doubled, offering customers greater choice in their saving and spending. Despite recent market turbulence, cryptocurrency remains a major component of trade in sectors as varied as gaming, charitable giving and investing. The NFT space continues to evolve in line with an ever-expanding metaverse. 

That said, when acknowledging the importance of commerce to customers’ daily lives, it’s notable to find that as of just a few years ago, 5.4% of U.S. households didn’t have access to a bank account. Additionally, research shows that online fraud continues to grow and change, posing a significant risk to customers and businesses alike. With so much change at present, is enough attention being paid to the potential of innovative technology to tackle long standing issues, such as effectively onboarding customers and tackling the threat of online fraud? 

Take onboarding today along the lines of knowledge-based authentication (KBA) practices; according to PwC, ‘banks are finding themselves hamstrung by organizational design and legacy technology’. For customers, this experience can include dense paperwork, having to visit a physical location and waiting for a processing period to finish. In an increasingly digital world, where food, entertainment and transport are available on-demand, today’s banks must take customers’ expectations into account in order to remain competitive. 

At the same time, with online fraud becoming more sophisticated and prevalent, customers want the assurance that their most sensitive personal information, like date of birth and financial details, are being processed securely. Customers aren’t alone in this demand; governments globally expect banks to achieve know-your customer (KYC) and anti-money laundering (AML) compliance or face the risk of serious penalties.  

Operating within the regulatory framework, offering a seamless customer experience and reducing the risk of fraud sounds like a sizable challenge - until the potential of innovative technology is considered. Passwords and two-factor authentication have come under sustained criticism, and the inefficiencies of KBA are infamous. What could be the next step to benefit businesses and customers alike? 

Selfie-based identity verification (IDV) has rapidly grown in popularity, with the sector predicted to be worth up to $18 billion globally within the next few years. It differs from the past where an ID would be checked in-person or manually reviewed as a digital image upload. These days, a prospective customer is able to select their document type, photograph their ID and take a selfie to confirm their identity. With a service like Veriff, recognized as a unicorn business with an international presence, the process can be completed in seconds due to advanced automation. However, this isn’t the only advantage brought about by innovation. 

In the past, honest customers around the world have been shut out of services unfairly due to providers’ limited capacity to process documents. This issue has been tackled by a service like Veriff, which has a constantly-growing database of over 10,000 document types from 190 countries, reducing the risk of financial exclusion. Furthermore, IDV does away with the flaws of older security measures, which can be exploited due to trends like phishing and corporate data breaches. It enables honest customers to prove that they are who they say they are in little time, in a straightforward and secure manner. 

By the same token, bad actors can be efficiently locked out of services through innovative processes. Fake IDs, or an ID being used by a person who isn’t who they claim to be, can be flagged and blocked through an automated process; the same applies to pre-recorded or deepfake videos being submitted as genuine during a verification session. These processes enable businesses to meet KYC and AML compliance through a single platform versus a bundle of legacy programs and manual processes, with research from Forrester finding that a Veriff client was able to achieve an ROI and reduce the risk of fraud in less than six months. 

Overall, the banking sector is changing swiftly, but more needs to be done to realize an optimized customer experience and effective processes to stay ahead of online fraud. For businesses across the board, Veriff represents the next step in improving onboarding and blocking bad actors. To find out more, click this link to download Veriff’s free ebook ‘How to improve the KYC experience in digital banking’.