Most banks lack digital identity verification ─Study

*FICO researchers say banks need to create a ‘frictionless process’ that will meet consumers’ expectations, as failure to do so could lead to a loss of business

 *Coronavirus pandemic has forced industries to fully embrace digital ─Company Executive

Emmanuel Akosile | ConsumerConnect

Scores of consumers of financial products and services more than ever before are using online banking during the Coronavirus (COVID-19) pandemic.

However, a fresh new survey indicates that banks in the United States (US) and Canada are yet struggling to implement practices that combat the unsettling online identity fraud and money laundering, without turning off their consumers, report said.

The survey, in an age of digital banking, discovered that just over half of North American banks are still requiring consumers to prove their identities by visiting branches, or posting documents when opening digital accounts.

The study found the same situation in 25 percent of mortgages or home loans and 15 percent of credit cards opened online.

On the need to rethinking their approach, Liz Lasher, Vice-President of Portfolio Marketing for Fraud at FICO, which commissioned the survey said: “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.”

Andrew of Scottsdale, Arizona, recently had this experience. In a post on ConsumerAffairs, Andrew revealed that a fraud alert resulted in his Chase bank account being locked.

Andrew wrote in his post, that “I simply called their security department and was told it was closed out due to bank identity and that I would have to go into a branch and show 2 forms of ID’s.”

Banks everywhere have instituted new procedures when fraud is suspected, a necessary measure considering the exponential growth of the crime.

FICO Vice-President, nonetheless, says all banks should consider making the process as user-friendly as possible because it’s good for business in the long run.

She stated: “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.”

On reasons banks are slow to embrace digital verification, the survey found that only 16 percent of North American banks use the type of fully integrated, real-time digital capture and validation tools that FICO says are required for consumers to securely open a financial account online.

Some banks have adopted some form of digital verification, but the study found that in most cases, the experience “still raises barriers,” with consumers expected to use e-mail or visit an “identity portal” to verify their identities.

The authors of the study suggest that banks create a “frictionless process” that will meet consumers’ expectations. Failing to do so could lead to a loss of business.

According to FICO’s recent Consumer Digital Banking study, 75 percent of consumers said they would open a bank account online.

But 23 percent of them stated they would give up and go somewhere else if they faced a difficult or inconvenient identity verification process.

Three-quarters of the banks in the study told FICO they plan to invest in an identity management platform within the next three years.