A disconnect looms in financial services, one that can doom relationships between financial institutions (FIs) and customers from the beginning. Studies have shown that 70 percent of applicants want to open their accounts digitally. However, less than half of traditional FIs are able to let those would-be applicants complete the entire process online.
In an interview with Feedzai Chief Product Officer Saurabh Bajaj, the executive told PYMNTS that consumers who have embraced mobile banking don’t want to interface with people or paper when opening their accounts. Ideally, they want to tackle forms on their tablets or smartphones.
Though banks have been able to create mobile interfaces where users can look at transactions, track spending and budget, they are behind the curve when it comes to account openings. As he noted, the experience and documents required often mean that users must wrestle with desktops, paper IDs or files — crossing channels, in effect — just to get on board.
The question for FIs, he said, is: “How do you bring technology and customer experience together to create a user-centric journey?”
The Challenger Banks
Challenger banks have been solving at least part of the application problem by asking for, what he termed, “more minimalistic information, but they are also using more modern technology” that allows individuals to verify their credentials with speed. Picture, then, the verification that takes place with selfies, or snapshots of government-issued IDs.
Though challenger banks may have a technological advantage over FIs, they have their own challenges to navigate, too. As Bajaj said, these tech-savvy upstarts have relatively less experience in navigating regulatory requirements at the national or even local levels, and they certainly have less experience in risk management.
As Bajaj cautioned, “You do not want to be focused on onboarding every single customer,” as such an approach may sacrifice quality for quantity.
Bringing AI Into The Picture
Against that backdrop, in early June, Feedzai introduced an updated account opening solution that uses advanced machine learning aimed at streamlining account opening processes, with an eye on centralizing banks’ fraud management systems to reduce friction and false-positives. As reported, the new offering lets banks’ data scientists leverage the Feedzai platform’s algorithm models, or use external third-party tools that can be imported onto that platform. The end result, said Bajaj, is to shorten workflows, both to develop risk models and shorten consumer journeys, to open and maintain relationships with those banks.
The dynamic workflow, he told PYMNTS, uses risk analysis and scoring at each point of the customer interaction as they fill in digital forms and answer questions. The models then ascertain how much incremental friction — if any — should be built into the process.
As he described, “this approach [of continuous risk assessment] allows you to cater to different segments,” and introduce, say, multi-factor authentication requirements for large transactions.
“It's almost as if the application process itself becomes customized for the customer,” said Bajaj, and in real time. The lower the assessed risk, the shorter the application time. A cost benefit accrues to the FI, too, as automated processes consolidate a view of the customer, so that what was once done for $10 (largely in labor costs) now costs pennies.
Such an approach demands that FIs have a more complete view of customers (aided by deep learning and graphical outputs), because “what he or she tells you on the application is not enough.”
Beyond the simple and static identifiers that span names, addresses and Social Security numbers, Bajaj said it is important to leverage other — contextual — data as well. Thus, artificial intelligence (AI)-powered models can look at Wi-Fi and IP information, mobile device data, biometric scans, and hundreds of other data points to examine and ID that people are who they have claimed to be.
The FI that leverages such a holistic view, once the relationship is established, also has the advantage of constructing a tech-based history with that customer. In the future, such risk-assessed surety can lead to reduced friction (and time) as users conduct future business with the bank. The customer who has a 10-year history with a bank has a steady rate of transactions, and a low risk assessment garners a level of trust.
He likened the end result to a “segment of one … you are not just matching data to data. You are matching behavior to behaviors.” He added, “You're essentially building a digital identity along this customer journey.”