Finextra Interview | Digital Account Opening Challenges and Solutions
Conor Hickey, Solution Architect at OneSpan, on why consumers are abandoning online bank account application processes, how banks can reduce applicant abandonment with digital ID verification, and what the future holds for biometric verification.
Hannah Wallace: First I want to home in on the subject of application abandonment during customer account opening, which is a real concern for banks. Can you tell us what's causing this?
Conor Hickey: Application abandonment is a hugely important topic for all financial institutions, especially banks trying to gain market share. A recent report by the Aite Group stated that up to 95% of all customers who start an account opening process don't finish that process.
Financial institutions typically experience a high degree of abandonment at the identity verification stage. Choosing an identity verification method that is appropriate to the product being sold or the type of account being opened is critical to reducing abandonment.
Further actions financial institutions can take to reduce application abandonment include:
• Implementing an omni-channel solution:
• ensuring that your customer can complete their account opening in a single session; and
• enabling your customers to move between channels in order to complete the process.
HB: How can financial institutions assess where in the process they're losing these customers and how can where do key performance indications (KPIs) fit in here?
CH: Financial institutions should look at their process and determine which area is causing the highest degree of abandonment. It could be that customers are abandoning account opening at the start of an application, because the online application page is too long and has too many fields to fill in. It could be that customers are dropping out, because the identity verification method used is inappropriate or causes too much friction for the customer.
Once you understand which area of the process is causing the abandonment, capturing data about the type of customer will be beneficial to solving your abandonment challenges. If, for example, you've identified the ideneity verification stage as the point where abandonment occurs, it could be that you have used an identity verification method that works very well for one geography or demographic, but does not work for another.
Financial institutions need to have a flexible solution. They need to be able to change their identity verification method for different customers and for different geographies automatically during the process.
HB: What are some of the challenges for banks using digital identity verification as part of account opening?
CH: Digital identity verification is a critical component of account opening, so any digital identity verification method used needs to be secure. And it needs to comply with regulations. That can't change. However, financial institutions need to make sure they deliver a digital identity verification method that does not interfere with or impair the user experience. They also need to make sure they have introduced it at the correct time, in the correct way, with minimal friction. Good customers are able to pass with ease and bad customers are stopped.
HB: What does the future of digital identity verification look like and what sort of technologies do you see banks investing in in the future?
CH: In the short term, financial institutions will move away from traditional verification methods such as Knowledge-Based-Authentication (KBA) and move towards biometrics. Liveness detection is also a technology that we're seeing really only coming up to industry standards in the past six months and I think we'll see further advancements in that and more adoption of biometrics by virtue of availability of liveness detection.
Apple have recently announced extension of support for Near Field Communication (NFC) tags for identity documents. I think in the medium term we will see more adoption of NFC as a technology.
If you have been looking at the papers recently you will have noticed a lot of articles about facial recognition and whether facial recognition technology breaches the privacy of an individual. I think there is going to be a higher degree of regulation associated with facial recognition, which will be hugely important.
Digital identity verification is a fast-moving industry, and we see new technologies coming on the market almost daily. The advice that I can give is that companies should be engaged in a verification hub solution strategy. Technology providers should provide multiple identity verification services to a financial institution via a hub so that the financial institution has access to different methods of identity verification and can change the method depending on the product.