That’s supported by findings in the new report “When ‘Good Enough’ Isn’t Enough: Digital Identity Verification in the Age of Bots and Agents,” a collaboration between PYMNTS Intelligence and Trulioo. The report revealed that for financial services firms, the systems that decide who can open an account, how quickly they are approved and whether they are flagged for review increasingly determine conversion rates, customer experience, geographic reach and revenue growth.
In other words, digital identity is no longer something firms do to comply with rules. It is becoming something they do to compete.
The report found that more than 75% of financial services institutions said identity processes prevent them from expanding customers, markets or geographies, while revenue losses from know your customer (KYC) and know your business (KYB) failures average 3%, totaling nearly $34 billion industrywide.
The importance of digital identity infrastructure is growing against an operational backdrop where 76% of financial services firms make at least 75% of their revenue through digital channels.
Why Identity Is Moving Into the Revenue Path
For much of the modern history of financial services, identity verification occupied a narrow and largely uncontroversial role. It existed to satisfy regulatory requirements, prevent obvious fraud and demonstrate procedural diligence.
In a digital-first environment, however, identity verification is no longer a downstream control applied after a customer relationship is established. It is the gatekeeper at the top of the funnel. Today, onboarding is instantaneous, remote, and often the first and sometimes only interaction a customer has with a brand. Identity verification, then, becomes the moment of truth.
This transition has been gradual and easy to miss. Most financial institutions do not regard their identity systems as deficient. Internal assessments often rate performance as acceptable or strong. Vendors are familiar, controls are audited, and processes have evolved incrementally over time. Serious failures are relatively rare.
But the implications of maintaining “good enough” digital identity are now becoming difficult to ignore.
Identity systems that are merely adequate tend to fail. Customers abandon onboarding flows without explanation. Expansion into new jurisdictions is delayed due to verification uncertainty. Product launches are constrained to segments that existing controls can comfortably support. Manual review teams grow steadily, absorbing exceptions that automation cannot resolve.
Read the report: When ‘Good Enough’ Isn’t Enough: Digital Identity Verification in the Age of Bots and Agents
The challenge is that such losses are diffuse. They are distributed across customer experience, operations and strategy, and are therefore rarely owned by a single function. As a result, they tend to persist longer than more visible forms of failure.
What the report data also suggested, however, is that these outcomes are not inevitable. Firms using more advanced or globally integrated identity platforms report that KYC and KYB become easier over time, rather than harder. More than 90% of global identity platform users said verification has improved with continued use, indicating that identity systems can learn, stabilize and compound in value when designed accordingly.
The research also underscored the changing nature of identity risk. Synthetic identity fraud, account takeover and adversarial bots and agents were cited as among the most common and costly threats facing financial services firms. These threats exploit automation and scale, often passing traditional verification checks designed for a simpler environment.
Here again, the report pointed toward constructive responses. Layered verification, multiple signal integration and ongoing monitoring were identified as factors that strengthen confidence in identity systems. Rather than relying on single, static checks, firms can combine document verification, behavioral analysis, consortium data and machine learning models to improve resilience.
The PYMNTS research did not argue that financial services firms are unprepared or negligent. On the contrary, it showed a sector that has invested in identity controls and built substantial institutional confidence in them. What it suggested is that the environment has evolved to a point where those investments can be used more productively.
Digital identity is no longer only about preventing the wrong outcomes. It is about enabling the right ones through faster onboarding, broader reach, lower unit costs and sustained trust in digital channels.
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At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.
