Attracting and holding on to deposits is the top priority for most banks and credit unions in this current industry environment. But in order to accommodate these new customers and give them an experience they can trust from the start, it’s crucial to offer a straightforward, safe, and seamless identity verification (IDV) process. Doing so enables financial institutions with a powerful process that’s able to weed out bad actors and fraudsters without creating additional friction for real and excited new depositors.
As digital banking innovates so do the fraudsters. Most often this is done by sneaking through the initial identity controls with real, but stolen, personal information that they use to open as many accounts as possible. Account opening fraud can also be executed by another method known as synthetic identity fraud. In this scenario, fraudsters will use a real Social Security Number, but falsify additional information such as telephone number, email, and name to create a new identity.
In order to protect your financial institution from these attacks, it is important to access and review large amounts of complex identity and behavioral data. However, if you were to try to complete this identity verification process by hand, it would be nearly impossible. Rather than burdening your back-office team with piles of additional documents such as property tax records, utility records, and mobile provider data, the process can be automated via machine learning algorithms. This technology is able to pull and analyze huge data sets, recognize users’ behavioral patterns, and then confirm or deny identities almost instantly.
In the fight against digital fraud, it is not realistic to expect community financial institutions to have the internal infrastructure they would need to protect against every attack. In order to insulate from these attacks, Socure Founder, President, and CEO, Johnny Ayers believes smaller financial institutions should consider outsourcing this task to partners that can help.
Whether a bank or credit union has already started down the path of digital growth or is new to the arena, now is a great time to get started on the transition from time-intensive manual reviews in favor of automation. The right fintech partnerships can help credit unions and banks digitally verify applicants with more confidence, get real customers approved faster, and reduce time and friction to account opening and funding.
Through a supportive fintech partnership, financial institutions can leverage advanced technologies that help spot fraud attempts more accurately and approve customers faster. Here are just four benefits financial institutions can look forward to when they find the right fintech partner for smarter identity verification:
New technologies create the means to more accurately segment customers by risk, enabling lower-friction digital experiences (and higher satisfaction levels) for low-risk customers. Meaning, the easily verifiable applicants can sail through the process, providing more time for back-office teams to review more suspicious applicants.
Fintech partners can help take a lot of the risky guesswork out of updating or implementing a new CIP for banks and credit unions. And since fintech vendors serve a wide variety of financial institutions, many are able to provide templates as a starting point and consult on a wide-array of compliance best practices. Ultimately, a good fintech partner can give teams the extra muscle they need to innovate while taking into consideration the unique challenges and quirks institutions may have.
Being ready for evolution is a must in the digital world. With the right digital partners, new technology and fraud-fighting tactics can be integrated behind-the-scenes resulting in a no-code method of staying ahead of the curve.
Stable, regular, and incremental updates mean that your platform will stay consistently current. It also positions institutions to be able to handily adopt new protocols, practices, and technology as they emerge.
Automating IDV opens up a vast universe of data that can help financial institutions make smarter, more accurate decisions. Banks and credit unions can tap into a vast network of data that goes beyond the standard credit information.
These data sets can be massive, though—too massive for a team whose time would be better spent helping customers and members in a personalized, human way. That’s where machine learning can come in. AI-driven models can take on these huge data sets for faster, more efficient decisioning, leaving only the edge cases to be assessed by human eyes.
Adding automation does not remove back-office employees from the IDV process, but rather gives them a direct look into how the decisioning process is done. In order to make the process as easy as possible for both employees and customers, it is important to weave the automation process into existing protocols. While undergoing the integration, it is recommended to still have the team perform a manual review process to ensure reconciliation. In order to simplify this as much as possible, Narmi offers easy to understand, color-coded decision results that allow teams to see red flags in an instant.
Not only does digital IDV lead to faster and better decisioning and approvals, it also allows staff to reallocate time to what is most important: enhancing customer service for new clients now that they have an instantly funded (and approved) digital account.