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Banks Lack Digital Identity Verification Process Consider The Consumer

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Banks Lack Digital Identity Verification Process Says Study

In-Person Visits to Branch Mostly Required

More and more consumers have become acquainted with the convenience of online banking. Survey shows, however, that U.S. and Canada banks are struggling to implement practices that combat online identity fraud and money laundering.

More than half of North American banks still require their customers to prove identities through branch visits or document posting when opening digital accounts.

This was also observed in the online opening of mortgages or home loans and credit cards.

Adapting to a Digital-First Economy

Liz Lasher, vice president of portfolio marketing for Fraud at FICO who commissioned the survey, has said that the “pandemic has forced industries to fully embrace digital. We now are seeing North American banks that relied on face-to-face interactions to prove customers’ identities rethinking how to adapt to the digital-first economy.”

One incident happened where a consumer was notified of a fraud alert on his Chase bank account which was subsequently locked. When the consumer contacted the security department, he was told to go to the branch and show 2 forms of ID to dismiss the bank identity alert.

Lasher also calls for a more user-friendly process where possible as it is good for business in the long run. She asserts that “today’s consumers expect a seamless and secure online experience, and banks need to be equipped to meet those expectations. Engaging valuable new customers, then having them abandon applications when identity proofing becomes expensive and difficult.”

A Need to Simplify the Digital Identity Verification Process

There is only about 16 percent of North American banks that use fully integrated, real-time digital capture and validation tools that FICO recommends to banks so consumers can securely open a financial account online.

Some banks use some form of digital verification, but customers are still expected to use email or visit an “identity portal” for identity verifications.

Around 75 percent of consumers have expressed the preference of opening a bank account online, but 23 percent of them would rather give up than face a difficult or inconvenient identity verification process.

More than half of the banks in the study said they plan to invest in an identity management platform within the next three years.

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