Douugh On Using AI To Power Smooth Onboarding And Verification For Digital-First Customers

Online security became a higher priority for consumers and financial institutions (FIs) as digital banking, shopping and payments surged last year. Consumers have begun to prefer invisible security methods, including artificial intelligence (AI)-enabled tools or those based on physical traits or behaviors that allow them to verify their identities remotely. A recent report found that 74 percent of consumers now believe biometric methods offer the most robust security, for example, while 66 percent favor behavioral analytics measures that require no consumer effort or input.

This latest shift in consumer demand has sent many FIs scrambling to adjust their approaches to onboarding, verification and security. Some are already designed to handle these processes, however, including Douugh, an app-powered digital bank based in Australia that does business in the United States. The neobank has no physical branches and has embraced emerging technology to power its onboarding experiences.

“Think of it as the benefit of starting with a blank sheet of paper — we have no legacy,” Andy Taylor, Douugh’s CEO, told PYMNTS. “We were fortunate enough to work with some very, very smart vendors out of Silicon Valley that have built some pretty awesome cloud-based systems.”

An AI-driven Approach To Onboarding, Curbing Fraud

Taylor explained that Douugh leverages AI-driven tools to streamline onboarding, reduce fraud and screen prospective customers as part of the know your customer (KYC) process. It uses applicants’ Social Security numbers to conduct anti-money laundering (AML) and U.S. Office of Foreign Assets Control (OFAC) checks, the latter enforcing sanctions that target global narcotics traffickers, terrorists, foreign regimes and other individuals classified as Specially Designated Nationals.

Taylor said that AI helps Douugh analyze and verify hundreds of pieces of a prospective customer’s identification data, which can allow most customers to open accounts digitally and remotely within three minutes. Only a small number of those onboarding will require more labor-intensive checks, he added, if the verification process turns up anything that could be considered suspicious.

A Digital Focus On Younger Consumers

Douugh’s digital ID focus for its onboarding process is in line with its mission to serve younger consumers, Taylor said. He explained that the app is geared toward millennials and Generation Z customers, offering features intended to help them establish firm financial footing. This is particularly crucial now, he said, as many Americans live paycheck to paycheck and cannot afford surprise expenses.

In addition to offering a Federal Deposit Insurance Corporation bank account and a debit card powered by Mastercard and Apple Pay, the app leverages AI and machine learning (ML) to analyze customers’ spending habits as well as their incomes. Taylor said this technology can help customers get a handle on their finances and begin reaching their savings and wealth goals.

“We view ourselves very much as an AI-driven smart banking app focused on helping customers budget and grow their money autonomously,” he said. “The big investment for us is really going into AI and machine learning to help customers reach their goals on autopilot.”

Taylor said that Douugh currently has about 15,000 customers but anticipates adding more when its app is rolled out for Android users, a move it expects to make soon. The company is also planning to shift to a subscription model and was recently granted registered investment adviser status, with which it intends to begin helping its clients make investments of varying risk levels.

“It’s kind of irresponsible to have your money sitting in the bank account earning zero interest,” Taylor said. “Unless you need that money instantly, we should be having you invest it in a managed portfolio for specific purposes.”

Douugh and other neobanks are particularly working to meet younger consumers’ banking needs, as many are eager to keep as much of the process digital as possible. Offering such individuals an end-to-end digital experience requires tapping the right technologies and verification solutions to keep the process secure, seamless and remote.