A version of this article first appeared in BAI’s May Executive Report: Unlock what’s next for digital. You’ll find insightful coverage in the issue on seamless consumer touchpoints, AI-powered loans, evolving a ‘digital-first’ strategy and more.

A robust verification strategy can help financial services providers establish and maintain customer trust while confirming consumer identity. Accomplishing both is increasingly difficult yet remains critical to conducting business.

With the right tools in place, master digital transformation

GBG’s State of Digital Identity Report found that 62% of U.S. consumers said they would be more likely to onboard with a business using more advanced identity verification.

As the world becomes increasingly digital, institutions must master the complexities of digital transformation. Staying competitive means effectively curbing rising fraud while keeping pace with consumer expectations. A layered approach to identity verification solutions can help financial institutions foster trust, empowering them to create more efficient digital experiences.

Start with trust, the foundation of a digital environment

As more organizations embark on a digital transformation journey, trust is a key enabler. To function effectively, an emerging digital economy must have a reliable means to ensure that relationships and transactions are fully trusted. By offering the highest degree of trust and assurance, digital identity is poised to become the cornerstone of the digital landscape.

There are duelling priorities when it comes to trust. Consumers want to know their personal data is secure, particularly during onboarding. Some 67% believe businesses are responsible for protecting consumer information, according to IDology data. At the same time, financial institutions want to trust that the person on the other end of a transaction is who they claim to be without adding unnecessary friction to the customer experience.

Reach consumers in ways they want to bank

Another critical aspect of a successful digital transformation is ensuring the customer experience is easy to navigate. Customers today have no shortage of options. In a recent survey, 70% said they were considering signing up for or switching financial service providers.

Ensuring a seamless and efficient digital interaction with consumers of every demographic is also key. While most consumers prefer a digital experience, preferences for how they engage with digital banking vary. For example, younger generations focus on ease of use and speed; they also prefer mobile. IDology data shows that 52% of consumers ages 18 to 24 report using a mobile device to create an account online. The older demographics are more security-focused and prefer using a computer. And 42% of consumers ages 65 to 75 prefer using a computer to create an online account.

Knowing the different preferences between groups and tailoring the digital journey accordingly can help organizations onboard a greater variety of consumers.

Combat trending digital fraud

By our measure, 68% of companies in the financial space reported an increase in fraud attempts compared to the previous year. Consumers hold a grim view of the future, with 56% expecting fraud attempts to increase, so it’s unsurprising that most consumers now rank a secure process as most important to them when opening a new account online. Creating trust in a highly digital environment will require better protection against trending threats.

Given rising fraud and consumer demand for security, financial services providers are under intense pressure to demonstrate trust through secure digital journeys. A layered approach to identity verification can help them fight back against trending threats, instilling a greater sense of trust in digital interactions.

IDENTITY VERIFICATION: 3 KEY STRATEGIES

1. Leverage artificial intelligence (AI) and machine learning (ML) to verify identities at scale​

AI-based tools have seen massive adoption in recent months, with 6% of U.S. companies using AI in 2017 compared to about 55% last year. This tech brings an ability to quickly scrutinize vast volumes of digital data and uncover patterns of suspicious activity.

Consumers set the bar high for secure and seamless digital interactions, with 37% of consumers abandoning a digital onboarding process because it was too time-consuming. ​AI, as part of a larger verification strategy, can help businesses accelerate identity verification.

2. Create confidence with human supervision

While it’s a powerful tool, AI often lacks transparency in the decision-making process, leaving businesses exposed when they must explain why a decision was made. ​

AI under human supervision allows institutions to balance automated decisions without sacrificing explainability. Bringing transparency to AI requires oversight by human fraud experts, who provide transparency, oversight and continuous improvement. This continuous feedback improves ML models through constant input and refinement.

3. Improve visibility into fraud through cross-industry collaboration

A consortium fraud network amplifies real-time fraud intelligence between companies and industries. With key insights into fraud threats trending in other industries, institutions strengthen their fraud management system while decreasing the risk of fraud and the costs associated with managing it.

Real-time, cross-industry consortium intelligence empowers organizations to stay ahead of shifting fraud tactics and improve decisioning accuracy.

Joel Sequeira is Director of Product at IDology, a GBG company.