Maximizing the Consumer Experience With Online Address Verification
As the digital economy rapidly expands, the financial services industry’s compliance processes must keep up the pace. The secret to mitigating fraud and keeping up with the digital shift lies in securing a reliable, multilayered approach to identity verification. Let’s take a look at how using online address verification can help minimize risk and enhance the customer experience.
The growing need for borderless KYC
Between 2020 and 2024, the number of mobile devices worldwide is expected to grow from 14 billion to 17 billion, driving the digital transformation and changing customer expectations. With this growth in mobile device usage also comes an increasing popularity of digital banking, as cell phone expansion enables transactions from anywhere with the click of a button.
Accompanying the digital expansion is the rising usage of fintechs. Fintech firms have surpassed traditional credit suppliers as the nation’s number one source of personal loans. In 2019, more than 20 million Americans had at least one personal loan – more than a third of which came from an online lender. As more people turn to digital banking, online lenders and merchants need to present frictionless digital experiences while also minimizing fraud risk across a global customer base.
In 2019, more than 20 million Americans had at least one personal loan – more than a third of which came from an online lender.
Multiple tactics offset the shortcomings of fraud prevention methods
Fraudsters rely on personally identifiable information (PII) obtained from data breaches, malware, phishing, and other techniques, to pose as real customers or create synthetic identities. As they become more tech-savvy, KYC procedures and fraud prevention methods must do the same. Within fraud prevention, there are both data and document-centric approaches to identity verification, and each method has its pros and cons.
A data-centric approach to verification leverages static data for customer onboarding and makes up about 85 percent of implementation today. Despite its popularity, this method can be limiting because it requires a lengthy history and sufficient public records, which younger generations and recent immigrants often lack. With a document-centric approach, consumers can remotely submit documents to verify their identities. However, a drawback of this method is that poor lighting or document image quality can raise flags, prolong the customer onboarding process, and introduce friction.
As an alternative, a growing number of ID verification software providers like TruNarrative are linking to consumer utility accounts to verify identity and address data, automating KYC compliance and minimizing the need for manual reviews. By offering their banking and online gaming customers additional verification options, businesses can offset the shortcomings of a single method and drive up customer conversion rates.
Automating lending compliance and account monitoring help reduce risk
When it comes to lending and account monitoring, online address verification can also help to reduce long-term risks. Compliance doesn’t end after customers are onboarded – technology-based solutions can help lenders to automate post-loan closing occupancy verification for FHA and VA mortgage loans. Online address verification solutions connect directly to the borrower’s service provider accounts to streamline the occupancy verification process.
The utility account data that’s collected can verify the borrower’s occupancy against the service and billing address from the utility provider. Companies like HelloSoda, an identity verification software platform for banking, online gambling and other industries, have streamlined self-service onboarding for customers by requesting access to alternative data sources. According to Pamela McLoughlin, Head of Strategy at Hello Soda:
“With the rise of open banking…it’s really making more and more people confident to connect a social profile or a utility account to quickly onboard themselves.”
An ongoing connection to a consumer’s utility accounts can also reveal irregularities and uncover residential instability. Thus, lenders and the fraud prevention services they use can see an additional benefit of leveraging utility account data: ongoing monitoring for behaviors associated with higher risk borrowers.
Leverage the power of online address verification
Lowering fraud risk is a top priority as fraudsters challenge companies to remain vigilant in their efforts – even after the customer is onboarded. The goal is to stay three steps ahead using advanced approaches. Consent-based access to utility account data is a reliable method that enables borderless KYC, automated FHA loan proof of occupancy, and online address verification to thwart bad actors and satisfy compliance requirements.
Urjanet’s Utility Data Platform securely connects businesses to their customers’ utility accounts for seamless digital verification. Thinking of integrating automated utility data into your online address verification process? Speak with one of our experts today.
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About Honor Donnie
Honor Donnie is a Marketing Intern at Urjanet, with a passion for content creation. When she’s not at Urjanet, she can be found studying Political Science at Clark Atlanta University.