Identity Checks — Creating Quick and Secure Onboarding Processes

When opening an account, customers fundamentally want two things – speed and security. Identity checks help on the security side and, if done properly, ensure the onboarding process is quick and easy.

According to a recent FICO survey, 74 percent of people expect access the same day when opening an online bank account. For those between the ages of 35 to 54, half expect access within an hour. Another statistic pointing to the need for speed, 48 percent of the survey respondents expect the ability to prove their identity online and the same number applies to being able to prove where they live.

Requiring online customers to contact a representative over the phone or visit a physical location to verify their identity is inefficient and inconvenient, contributing to abandonment; 22 percent would either quit the process altogether or go to a competitor and 13 percent would get to it – eventually.

Losing one in five potential customers due to slow and cumbersome identity checks is a significant customer acquisition cost and demonstrates why challengers who are customer centric are attracting more and more new customers.

However, security must not be overlooked. Ninety-seven percent of customers understand the need for security requirements. Beyond the customer experience and expectation that their information is secure, the financial institution needs to mitigate the risk of fraud, which also has potential significant bottom-line impact.

Secure identity check processes are also a compliance requirement for banks and other obliged entities. Know Your Customer (KYC) regulations demand running checks on any individual or business opening accounts within regulated industries, such as banks, money service businesses, and brokers.

Types of Identity Checks

Identity Verification
An identity verification (IDV) confirms that an identity provided actually exists and matches records. However, this does not indicate that the identity is authentic, that the individual is who they say they are. An IDV check will look at information such as name, address, passport number, national id number and date of birth to confirm that there are records on file that matches that data.

Identity Validation
While the identity information might match a record, without validation a record with inaccurate of fraudulent data would seem legitimate. An example is ensuring a social security number has been issued and the person is actually alive. Validating identity information adds an additional risk-mitigation layer.

Document Verification
Document verification analyzes, verifies and authenticates different types of identity documents to determine authenticity and legitimacy as well as ensuring a document is not forged or altered.

Identity Authentication
Identity authentication determines if the person is who they say they are. Authentication relies on additional data that is difficult to produce, except by that specific person.

Knowledge-based Authentication (KBA)
An identity authentication process that uses questions that (supposedly) only that person knows. For example, Mothers maiden name or name of your first pet are common KBA questions.

Biometric Authentication
An identity authentication process that uses the uniqueness of a human characteristics, such as a fingerprint, retina, face or voice, biometrics provides identity information about something you are.

Two-Factor Authentication (2FA)
An identity authentication process that combines two different factors: 1) something they know, 2) something they have, or 3) something they are.

Identity Checks: Balancing Speed and Security

With all the different types of identity checks, what is the best way to provide the speed that customers demand with the appropriate level of security? The answer differs, depending on the regulatory requirements, industry, company, and customer.

Deploying systems that are flexible will help deliver results that are appropriate to the situation. Flexibility, in this case, is about being able to deliver different types of identity checks and types of data from a variety of sources; the more data inputs, formats, and channels a system can deliver, the more robust the information.

Flexibility also refers to being able to adjust the checks, depending on risk assessments. As each check represents a different risk level, customizing rule sets optimizes performance by delivering the best match levels for that level of risk.

Of course, the throughput requirements demand an automated system. While manual checks are sometimes necessary, any manual check slows the process for customer and compliance alike.

Performing identity checks at the speed that customers want combined with the security that compliance and fraud prevention demands is not necessarily about trade-offs. Delivering a delightful customer onboarding experience is possible with the right systems and processes in place.