Traditional bank account opening methods have long involved visits to branches and face-to-face meetings with officials in which physical identification documents are presented. These methods were rife with frictions and challenges even before the pandemic began, but now they also carry health risks due to the potential for viral infection. Many of these processes had begun to shift to digital channels within the past several years, however, and the health crisis has caused the online shift to pick up steam at an incredible pace.
Despite these digital developments, there are still hurdles that banks and other financial firms must overcome. A recent survey of the 20 largest United States financial institutions (FIs) found that 20 percent still force customers to complete onboarding by visiting bank branches or speaking on the phone, with full online sign-up not allowed.
Nonetheless, Many FIs are looking to simplify and secure their onboarding procedures while also enabling customers to stay safe during the pandemic, leading them to seek out innovative technologies to do so. Video-based know your customer (KYC) processes are particularly promising in this regard. These technologies allow customers and business clients to swiftly and seamlessly onboard remotely, making sign-up processes more accessible and reducing abandonment.
The latest Digital Identity Tracker(R) examines KYC regulatory requirements FIs face as well as how video-based KYC can ease onboarding for all parties.
Around The Digital Identity Landscape
Identity verification solutions provider Jumio recently announced that it launched a video-based verification solution geared toward FIs, FinTechs, digital wallet providers and cryptocurrency exchanges that are looking to boost their digital onboarding capabilities. The technology allows companies to confirm potential customers’ identities online by comparing images of an ID document with selfies while recording the whole process. Jumio said the offering can reduce operational costs by as much as 90 percent, eliminate in-person visits and paper costs, and simplify archival processes.
Australia-based telecommunications company Optus recently announced that it has agreed to a partnership with Mastercard. The deal will enable Optus to allow its 6 million mobile app users to create digital identities to more smoothly purchase new devices or services and make account changes. The company said the collaboration will allow it to replace paper-based ID verification processes with digital control over information sharing.
Brazil-based facial recognition and identification technologies provider Acesso Digital recently reported that more than 5.2 million applicants used its facial biometrics service to validate credit applications in September. The company said its technology prevented one fraud attempt every 51 seconds during the month, totaling 22,000 thwarted attacks. It also noted that it stopped 144,946 fraud attempts from March through September.
For more on these and other developments, check out the Trackers News & Trends section.
Capital Float On Using Video-Based KYC To Boost Onboarding, Satisfy Regulators
FIs are racing to find the latest technologies that can ease online sign-ups while meeting KYC regulations, and video-based customer identification processes (V-CIPs) are seen as especially promising solutions. Proponents of these tools say they promote digital onboarding without requiring branch visits or paper documentation. In this month’s Feature Story, Prasad G R, operations head at digital lender startup Capital Float discusses how the India-based digital lender’s adoption of V-CIP has sped up its onboarding processes, leading to fewer cases of customers abandoning sign-ups and making the procedures more secure.
KYC requirements are nothing new. HSBC, Europe’s largest bank, was fined almost $2 billion eight years ago after it allowed $881 million in laundered cash to pass through accounts linked to terrorists and drug dealers, garnering attention worldwide and putting a renewed focus on KYC processes. New technologies are now allowing FIs and other financial players to quickly, frictionlessly and securely confirm customers’ identities and sign them up digitally, however. This month’s Deep Dive explores how video-based verification is meeting regulators’ KYC requirements and making digital onboarding a breeze.
About The Tracker
The Digital Identity Tracker(R), a PYMNTS and Jumio collaboration, is a monthly report that examines the evolving digital space. It is the go-to monthly resource for updates on trends and changes in the digital ID industry.