Digital Consumer Onboarding Dines On Data

Onboarding has always been important, but amid COVID-19-induced chaos its criticality has become absolute, as hundreds of millions of people and businesses request trillions of dollars in financial assistance from federal and state sources.

Meanwhile, the fraud opportunities created by current conditions are potentially staggering.

As is stated in PYMNTS’ inaugural Digital Consumer Onboarding Tracker® done in collaboration with Melissa, “Many banks are … taking closer looks at know your customer (KYC) and onboarding solutions that deliver both fast and secure onboarding experiences. Several players are hoping that biometric-based authentication procedures will provide seamless options for customers, while others are building and utilizing more reliable data sources for verification.”

Speeding Things Up

Many financial institutions (FIs) were performing measured, unhurried due diligence on KYC and anti-money laundering (AML) solutions before the word “COVID-19” was known. The disruptions caused by the coronavirus pandemic, however, have forced FIs to speed up plans to integrate better AML/KYC solutions as they authenticate a slew of new accounts. Unless that process is happening in real time or close to it, lenders remain vulnerable.

“FIs are under increasing pressure to successfully balance the regulatory mandates for compliance, like the EU’s 5AMLD that became law in January, with the need for fast, seamless onboarding,” Bud Walker, chief strategy officer for Melissa, told PYMNTS. “Inefficient onboarding is a key driver behind a 56 percent abandonment rate for banking customers. This means FIs must ensure that the ID verification process takes place in real time. A real-time process has to mitigate the … data entry errors that are common during the application process, which include manual data entry and duplicate data.”

Given that 88 percent of fraud specialists inside banks say that the most valuable risk assessment tools also help with onboarding, the hunt is one for more robust solutions engineered for scale and real-time processing.

“Consumers are searching for instant access to new services, with their experiences on platforms like Netflix and Uber setting customer expectations across various industries,” the report states. “The key to seamless authentication is always having access to the right data, making FIs’ sources for their KYC processes extremely important.”

Crafting A Solution

The data requirements for accurate real-time identity solutions are massive. Legacy systems with short memories and limited access to larger, more dynamic datasets are a wrench in the works of FIs toiling to balance customer experience with security.

“Crafting KYC processes that combine customer data from credit agencies, governmental sources, utility companies or even social media sites with banks’ previously siloed data is one way they could potentially enhance their onboarding processes’ security while maintaining speed and seamlessness,” according to the new report. “Access to varied data sets can help FIs check potential customers’ information against multiple points for any possible red flags without further involving those customers. Using biometrics in place of old-school KBA procedures and passwords can also help improve the overall onboarding experience.”