The Future of Banking: Digital Account Opening

Since fintech has come to the forefront of the financial services industry, the entire landscape has evolved. The rise of new challenger banks built on modern technology, and with a customer first ethos, has resulted in the market share of the big four legacy banks, dropping significantly over the past 10 years (from 92% to 70%). Legacy banks must adapt to the shifting landscape, or possibly join the predicted one-tenth of European banks that won’t survive the next 5 years.

Agreements are deep-rooted in the world of business, but the importance and sensitivity of agreements in banking, such as when opening a new bank account or taking out a mortgage, carry with them a higher value and risk than your everyday employee agreements. They’re also subject to legal enforceability and regulatory standards.

At present, most banks still rely on legacy approaches to agreements that can require lengthy application processes, branch visits and a sub-optimal mobile experience.  As banks move to a fully digital process, they need to balance customer experience and risk/security. This isn’t about a trade-off between security and customer experience, but rather how to deliver BOTH – offering an experience with the necessary security safeguards while ensuring a frictionless digital experience.

Modern day tools such as; ID verification and e-signature have made it possible to fully digitize the agreement process, while enhancing the customer experience and removing the risks associated with manual agreements. Banks and financial institutions (FIs) must adopt these new technologies in order to continue competing in the modern digital banking landscape.

E-signatures: Enhancing Customer Experience and Compliance

Signatures are a traditional form of verifying identity, but manually “wet” signing documents can be a time-consuming process, that can involve visiting a branch, or printing, scanning, and posting documents, all of which carry a higher chance of human error. The pain-points associated with manual signatures only become greater if an agreement spans geographical regions. Given this, banks are increasingly adopting e-signature solutions as a more seamless and secure e-signing experience  that allows banks to acquire new customers quicker, offer a higher quality service, no matter their location.

E-signatures also help banks remain compliant with GDPR and other regulations, by capturing a customer’s digitally signed document supported by comprehensive visual audit trail detailing what the customer has agreed to, when and how they signed.

While many banks have already adopted basic e-signature abilities, the technology alone is not enough to completely automate the new accounting opening process while reducing fraudulent enrollments. For example, manual identity document verification checks, or introducing paper agreements, are all ways in which banks end up with a semi-automated or siloed process, increasing application abandonment rates and application fraud while negatively impacting the overall customer experience. 

Modern Identity Verification

Verifying the identity of customers is an essential component of banking, where interactions are high-value and security is of paramount importance. The most common methods of customer identity verification methods have traditionally involved a customer visiting a branch and presenting their ID documents, or banks using legacy knowledge-based authentication (KBA) methods that cross reference the fixed identity information the customer provides against a database from third-party or credit agency.

However, as the banking landscape has shifted, and technology has advanced, both approaches are no longer adequate. The number of physical bank branches are falling, the appetite for digital banking has never been higher, and challenger banks that employ modern identity verification methods are on the rise. Given this, it’s becoming more difficult for legacy banks to justify asking customers to come in-branch to verify their identity during the account opening process.

Because KBA relies on static information that’s becoming more widely available thanks to the number of data breaches in recent years, it’s no longer a secure means of verifying identities. If cybercriminals can get their hands-on personal identifiable information (PII), then it becomes all too easy to open fraudulent accounts.

Banks need to be able to verify identities without compromising on customer experience or security. One method of doing this is by implementing context-aware identity verification, which is a combination of digital identity verification methods, such as ID document capture and facial comparison, with risk analytics.

Digitizing the account opening process by automating agreements results in an improved and secure customer experience. For banks and FIs it allows them to increase application conversion rates,  achieve regulatory compliance, while becoming more operationally efficient.

The banking industry has never been more competitive, and customers are more open to switching bank providers than ever before. Automating the account opening process allows banks and FIs to provide a secure experience across the digital customer journey and ensures customer loyalty and helps to grow top line

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