Optimising the onboarding process is crucial if banks are to offer a great customer experience. As Abe Smith argues, innovative use of the latest biometric technologies benefit both customer and bank alike

Voice recognition, fingerprint access and logging in with a selfie (pioneered by TSB in the UK, for example, in 2017) have all been adopted by banks in a drive to improve security without compromising customer experience. Banking customers are more receptive to using biometrics than ever before: a study by Mastercard and Oxford University in 2017 found that nine out of 10 people favour biometric logins over a PIN or password.

The use of biometric technology is now being extended to the onboarding process, with biometrics being adopted by innovative banks as an effective way to verify a customer as part of KYC. This takes a slightly different approach from using the technology for processes such as secure login or payment authorisation, where one technology (fingerprint, facial recognition) provides access to a bank account, for example.

For KYC, the combination of Facial Recognition Technology, Document Verification Technology and Liveness Detection Technology can now be used as an effective means to verify a customer.

There are many ways to carry out KYC checks during the onboarding process. These often depend on the type of agreement, geography, the associated risk, and industry regulations. At the core of KYC is the need to verify that a customer is who they say they are, and that they are not attempting to enter into an agreement illegally or fraudulently.

Breaking new ground

Used together, Facial Recognition, Document Verification, and Liveness Detection, are breaking new ground in the digital customer onboarding process – where combined and triangulated, they become greater than the sum of their parts.

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The real beauty of this new approach is that it’s so simple to use for both the bank and the customer. The proliferation of smartphones means that almost every retail banking customer carries with them the technology needed to verify their identity, wherever they are, 24/7. The key is in the camera – which can capture both a high-resolution selfie, and an image of an ID document in real time. Gone are the days of needed to take a passport into a local branch, and all the manual processes that go with verifying it. These technologies are scalable and accessible to everyone.

The technologies can be combined in the onboarding process to help verify the customer in the following way:

  • Step 1 – Check that a customer’s documentation is legitimate: The customer takes a photo of their identity document. Document Verification Technology scans the image and uses sophisticated algorithms and machine learning to determine whether the document is genuine or fraudulent.
  • Step 2 – Check that the ID data matches the data in the application: As it scans the document, Document Verification technology also extracts and compares the data on the document (such as name and D.O.B) to the data in the application. This means that the bank can verify, in real time, that the applicant is who they say they are, and that their identity documents are genuine.
  • Step 3 – Check that the customer is genuinely who they say they are: The customer takes a photo of their face. Liveness Detection Technology detects whether the image is a real selfie. If so, Facial Recognition Technology compares the selfie to the image on the verified document. If the images match, the customer can continue with their application.

While these technologies can be used to great effect separately, it is when they are combined that they create compelling evidence that the customer is who they say they are. This approach removes the need for traditional processes such as manual fraud detection (which is labour intensive, using specially trained staff to check the veracity of the ID document); data input; and manually comparing a customer’s face with their ID (which is notoriously error-prone).

 Mobile-driven slick onboarding

Furthermore, it creates a mobile-driven, slick onboarding process for the customer. From their perspective, all they do is take a couple of pictures, and (provided their application is not fraudulent) receive instant permission to complete the transaction or agreement signing. It’s a great customer experience.

What happens to this data after the onboarding process is critical. Of course, it must be secured. But to create a robust, compelling evidence trail, it should also be connected to all other data that is relevant to the agreement process and the customer’s identity.

That data might include, for example, the financial agreement itself, credit / affordability and identity checks, anti-fraud and AML screening, and eSign.

All these component parts can be linked and sealed in a tamper-proof, secure vault, and used as evidence in the event of a customer complaint, legal challenge or a regulatory investigation.

This not only creates a detailed view of the customer that a bank needs as part of KYC/AML but creates a complete and robust audit trail of the whole onboarding process. This breaks down silos, keeping a record of everything relating to the customer’s identity in one place, securely sealed, and easy to find if it’s needed.

There has been much talk about whether banks are forced to choose between risk management and innovation that drives a better customer experience. But the two are not mutually exclusive. Real innovation comes from doing both.

The banks leading the way in this area are turning a mundane, manual process into something that is tech-driven, simple, scalable and accessible, improves risk management, and creates stronger evidence of the customer’s identity.

Abe Smith is the founder and CEO, Dealflo