Smooth Sailing for ID Verification

Identity verification measures are often intrusive, time-consuming, and downright painful for consumers. Research suggests that, in order for banks to keep existing customers happy and attract new ones, the user experience needs smoothing-out. New low-friction ID verification options offer a tailored solution.

The Rough Seas of ID Verification

If you’ve ever applied for a new bank account, you’re familiar with the ID verification process. Dig out a couple forms of ID. Enter your social security number, street address, and plenty of other sensitive, personal information. Perhaps supply a paper utility bill or credit card. Submit to all sorts of questioning about your financial health and income. And finally, wait up to three business days for your account to be approved, and a week or more to receive your debit card.

This process is rife with what user experience (UX) designers would call friction, which UX design firm Digital Telepathy defines as “interactions that inhibit people from intuitively and painlessly achieving their goals within a digital interface.” For our purposes, let’s imagine this friction as choppy water. It makes for slow, difficult sailing, especially for today’s users who are accustomed to the calm, clear seas of the modern Internet.

Friction in online banking takes on many forms. It shows up in the unintuitive design of banking websites and apps, where the functionality a user cares about – transferring money between accounts, for example, or checking an account’s balance – is sometimes buried in jargon or hidden in clunky, poorly-designed web pages. It lurks in the slow loading speeds and sometimes unpredictable security lockouts users encounter when conducting their online banking.

And it coils – like a sea serpent – around the identity verification process, where the turnaround times are slow, the obstacles are many, and the onus is on the user to justify her presence on the platform.

High Friction…

When considering an applicant for a new bank account, banks care about one question above all others: are you who you say you are? Verifying that an applicant really exists is in the bank’s best interest, of course, because it’s their primary line of defense against fraud (which analysts expect to keep growing for the near future). It’s also legally mandated, as we’ve covered before. The anti-money laundering and anti-terrorism provisions of modern U.S. financial laws require banks to thoroughly vet their customers’ identities before engaging in transactions with them. All this pressure on financial institutions has rallied the banking zeitgeist around security. As the New York Times reported earlier this year, today’s banks go to great lengths to fight cybercrime and make both investors and customers feel secure.

The industry’s risk aversion and tough regulation has led to almost universal collection of social security numbers, requirements to present multiple forms of government ID, the addition of multiple security questions, and slow approval times for new applicants. The more data that financial firms can obtain about their customers, the more secure they feel that those customers are in fact who they claim to be.

… Low Security

Ironically, this practice has resulted in some vast security breaches across industries. In 2017, Uber paid $100,000 in hush money to a hacker after he’d stolen more than 57 million users’ financial information from the ride-sharing company’s databases the previous year. Yahoo’s 2013 security breach, which the firm infamously attempted to conceal from the public, is estimated to have jeopardized the data of all three billion of its users.

The collection and storage of personal, identifying information about consumers represents a tremendous security vulnerability for any firm. Banks, especially, often ask for and receive our most sensitive, most potentially-damaging information. For them, this represents both a painfully slow, high-friction part of the user experience and a veritable information security time bomb. This March, two small Canadian banks experienced a data breach that exposed more than 90,000 customers’ information. Unless banks start reimagining their ID verification processes, these two data breaches might represent merely the tip of the financial security vulnerability iceberg.

Click here to learn how utility data can empower tomorrow’s ID verification solutions.

The New Wave of Low-Friction ID Verification

The state of the industry may seem hopeless. Data breaches, after all, have become an expected, if dreaded, part of our online lives. Banks, though, are beginning to take a cue from the tech industry. A new report from Business Insider Intelligence cites competition from tech giants like Google and Amazon as a key factor pushing banks to digitize and modernize toward low-friction ID verification processes.

Digital identity solutions firms like IdentityMind Global, Trulioo, Gemalto, and others have emerged to serve this growing need, promising quick, low-friction ID solutions for financial platforms. These services incorporate features like automatic document scanning and biometric security – like the face and fingerprint recognition capabilities built into users’ smartphones – to quickly and smoothly verify a customer’s identity. Banks can avoid storing users’ personal, identifying information on their servers, in part, with the introduction of these secure third parties who make it their business to access and transmit users’ data.

Smooth User Experience, Smooth Sailing

Any financial risk manager will tell you: the best risk is none at all. By avoiding the collection of sensitive personal data whenever possible, financial institutions both lower their exposure to the risk of data breaches and reduce friction in the user experience. Trusted data providers like Urjanet can retrieve and supply user data on behalf of ID verification solutions firms, who in turn verify a user’s identity on behalf of their financial sector clients. All of this can happen in minutes, as opposed to the insecure, inefficient manual data collection and review still practiced by some banks and lenders.

In short, where customers have historically been asked to enter line upon line of sensitive personal information on a bank’s website, today’s banks can achieve greater levels of security and confidence with a fingerprint, a driver’s license photograph, and an electric, cable, or mobile phone account. To us, that sounds like smooth sailing.

Urjanet is the world’s leading provider of on-demand utility data. To learn more about how our Utility Data Platform empowers low-friction ID verification solutions, click here. And if you’re ready to make your utility data work for you, contact us today.

Related Resources:

• Automating the Regtech Workflow
• Webinar Recap: Secure ID Verification in a Digital World
• Solving for Simplicity and Security: Improving ID Verification for Alias-Based Transactions

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