Identity verification is fundamental to the digital account opening process. The Patriot Act’s Customer Identification Program (CIP) requires that financial institutions verify that applicants are who they say they are. Without a robust CIP program, financial institutions could be subject to fraud or other losses, terrorism financing, money laundering, tax evasion, and other potentially costly, illegal, or reputationally harmful activities.
A financial institution's CIP can take many different formats and approaches. Generally speaking, there are two components to CIP:
With today's consumers expecting instant results, every minute – if not second – added to the account opening process significantly increases abandonment rates.
Narmi has written previously on if your financial institution should collect a driver’s license during account opening. While Narmi strongly encourages financial institutions to practice non-document based verification, many financial institutions prefer to keep the government ID requirement in place. If this is the case, you must ensure you collect this document in the most seamless way possible to ensure conversion rates do not suffer.
The average form abandonment rate in the U.S. is roughly 71%. In fact, with every additional question asked, conversion rates can drop by 4-10%. In this digital-first age, people expect low effort and frictionless onboarding experiences that take no more than a few minutes to complete. The key to designing an account opening experience that consistently results in completed applications is understanding the user journey and identifying potential pain points. ID capture is a critical touchpoint in the account opening process that can become a roadblock if not placed at the very end.
An applicant starts opening a bank account online. They fill out their contact details and are then prompted to take a picture of their photo ID and submit it for verification. Their ID card isn't on hand, so they deviate from the page and decide to open the account later.
More likely than not, the applicant will not complete the process and the financial institution forever loses them without collecting enough of their information to follow up. More specifically, you do not have any information related to funding, acceptance of terms, or enough information to run your CIP.
An applicant starts opening a bank account online. They fill out their contact details, provide debit/credit/ACH information to fund their account and their social security number, accept the terms and conditions, and click "submit my application." They are then prompted to take a picture of their ID and submit it for verification.
Putting ID capture at the very end of the application process, after the applicant submits their application, reduces abandonment and ensures that the financial institution receives the necessary contact details and account information to initially decision the applicant whether or not they submit a photo ID. Furthermore, if the applicant has made it this far in the process, they are also more likely to put in the effort to complete the final step and submit a photo ID.
If the applicant abandons the process before submitting a photo ID, the financial institution will have the information it needs to follow up with the applicant and re-process the application immediately. Best-in-class digital account opening providers do this automatically.
The faster the account opening process, the more likely applicants are to complete the necessary steps, and the more likely your financial institution will receive new accounts and deposits.
With the MOBILE Act of 2018 (Making Online Banking Initiation Legal and Easy), financial institutions can digitally onboard applicants from a scan of their government-issued ID submitted via a smartphone app or a website. Advanced technologies, such as intelligent document readers, machine learning, and facial biometrics, give financial institutions sophisticated ways to collect identity information accurately. Leading data sources like Socure can help financial institutions validate the ID. The challenge, however, is packaging these technologies into a quick and easy photo ID capture solution.
An applicant starts the online account opening process on their desktop and makes it to the application's ID scan portion. The applicant has the option to take the photo from their desktop camera or via mobile. The applicant chooses mobile, types in their cell number, and receives a link to activate their mobile camera. The applicant takes a picture of their state ID or license and then takes a selfie which is used to verify that the applicant is the person in the photo ID. The whole process is completed in under a minute.
With 70% of internet users accessing the web via their smartphones, ID capture needs to support both mobile and desktop devices. A digital provider that understands this will enable applicants to verify themselves remotely by snapping a photo of their ID with their smartphone and, if necessary, a picture of themselves. Using mobile channels combined with intelligent technology ensures a fully automated identity verification process that meets KYC requirements while minimizing obstacles for the applicant.
Capturing government IDs reduces risk, builds customer and member confidence, and empowers financial institutions to meet KYC/AML/BML regulations. While this is an added step to the account opening process, if implemented correctly, it should not be a point of friction. If photo ID capture is a necessary part of your account opening process, look for a digital account opening provider with a deep understanding of UX design and the tools to provide omnichannel identity authentication. Photo ID verification doesn’t have to come at the cost of high conversion rates.
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